F 

266 
.C378 
no. 1-6 


THE  PUBLIC  DEBT 

OF 

SOUTH  CAROLINA. 


[REPRINTED  FROM  THE  NEWS  AND  COURIER.] 


CHARLESTON,  S.  C. 

THE  NEWS  AND  COURIER  BOOK  AND  JOB  PRESSES. 

1878. 


Digitized  by  the  Internet  Archive 
in  2015 


/ 


https://archive.org/details/publicdebtofsout01unse 


THE  PUBLIC  DEBT. 


AN  INTRICATE  AND  IMPORTANT  QUESTION. 

[From  The  News  and  Courier,  January  3,  1878.] 


It  is  unfortunate,  in  some  respects,  that  ] 
it  should  have  been  considered  necessary 
by  the  General  Assembly  to  undertake  an 
examination  of  the  character  of  the  State 
dsbt.  As,  however,  the  investigation  was 
ordered,  it  could  not  be  made  too  thor- 
ough, and  no  fault  is  to  be  found  with  the 
Bond  Commission,  for  the  laborious  care 
with  which  they  have  scrutinized  every 
branch  of  an  intricate  and  a  difficult  sub- 
ject. The  expectation  is  that  the  report 
of  the  Commission  will  be  presented  upon 
the  reassembling  of  the  Legislature  after 
the  holidays,  and  a  better  time  is  not  likely 
to  be  found  for  recalling  to  the  public 
mind  considerations  and  facts  which  may 
have  been  overlooked  or  forgotten.  This 
is  requisite  to  intelligent  action  upon  the 
report,  action  which  is  expected  to  be  final 
and  conclusive. 

The  debates  in  legislative  bodies  rarely 
throw  full  and  clear  light  upon  questions 
involving  both  interest  and  sentiment,  and 
with  little  opportunity,  in  the  hurry  of 
business,  to  weigh  assertions  and  analyze 
reasoning,  the  disposition  is  to  agree  to  the 
readiest  and  simplest  solution  that  is  of- 
fered. There  is  the  more  danger  of  this 
when,  as  in  the  present  instance,  the  dis- 
favor with  which  the  legislation  of  the 
past  eight  years  is  justly  regarded  ob- 
scures the  merits  of  the  matter  to  be  dealt 
with,  and  clouds  the  vision  of  those  who 
are  usually  clear-sighted  and  impartial.  It 


seems  to  us,  therefore,  that  we  shall  do 
the  public  a  service,  if  we  place  before 
them  a  statement  of  the  origin,  rise  and 
condition  of  the  public  debt  of  South  Car- 
olina, covering  circumstances  and  details 
that  are  not  within  the  scope  of  the  work 
of  the  Bond  Commission,  and  are,  never- 
theless, indispensable  to  a  thorough  com- 
prehension of  the  different  propositions 
that  will  be  submitted  to  the  Legislature 
with  the  Commission's  report,  or  in  con- 
flict with  its  recommendations. 

There  is  evidently  little  exact  informa- 
tion concerning  the  public  debt  in  posses- 
sion of  the  public.  Small  confidence  was 
reposed  in  the  financial  statements  pub- 
lished by  the  former  State  officers, 'for,  at 
different  times,  these  reports  had  been 
shown  to  be  misleading  or  untrue.  The 
venality  of  the  State  Government,  in 
what  was  known,  filled  the  public 
mind  with  the  idea  that  the  unknown 
was  rotten  to  the  core.  In  their  pardon- 
able desire  to  arouse  the  public,  the  Demo- 
cratic orators  and  party  newspapers  were 
not  always  precise  in  their  statements.  A 
few  millions  more  or  less  make  little  dif- 
ference in  the  heat  of  a  political  canvass. 
There  is  no  doubt  a  prevalent  idea,  not 
confined  to  non-officeholders,  that  the 
State  debt  mounts  up  to  fifteen  or  twenty 
millions,  and  is,  as  a  whole,  the  embodi- 
ment of  Republican  extravagance  and 
fraud — the  legacy  bequeathed  to  an  im- 


4 


poverislied  people  by  audacious  and  un- 
scrupulous rulers.  This  is  only  one  of  the 
many  misapprehensions.  .  Under  ordinary 
circumstances  we  might  safely  trust  to 
time  for  the  correction  of  error  and  the 
dissemination  of  truth.  But  we  regard 
the  debt  question  as  one  of  paramount  im- 
portance, not  so  much  to  the  public  cred- 
itor as  to  the  people  of  South  Carolina. 
For  this  reason  we  shall  lay  before  the 
public,'  as  briefly  as  we  can,  the  history  of 
the  Public  debt  from  the  beginning. 

Starting  with  the  debt  as  it  stood  at  the 
time  that  Governor  Orr  went  out  of  office, 
we  will  show  the  whole  amount  of  the  debt 
in  1888,  in  1873,  and  in  1877,  and  the  opera- 
tion of  the  Consolidation  Act  as  affecting 
the  amount  and  character  of  the  debt. 
Having  shown,  the  objects  and  effects  of 
the  Consolidation  Act,  we  will  consider  the 
relative  advantages  of  other  modes  of  ad- 
justment; such  as  (1)  casting  out  the  Re- 
publican bonds,  representing  debts  con- 
tracted by  the  Republicans,  and  recogni- 
zing the  whole  of  the  bonds,  and  other  lia- 
bilities, outstanding  when  the  Republi- 
cans came  into  office;  (2)  recognizing 
the  old  bonds  as  before,  and  recognizing 
the  Republican  bonds  to  the  extent  of  the 
money  actually  received  for  them,  by  or 
for  account  of  the  State;  (3)  recognizing 
the  Consolidation  bonds  and  stocks  repre- 
senting the  Old  debt,  rejecting  all  other 
post-reconstruction  bonds  and  stocks,  and 
completing  the  funding  of  the  Old  debt 
exclusively  under  the  Consolidation 
Act.  We  shall  then  see  whether,  as 
a  matter  of  money,  it  is  to  the  interest  of 
the  people  to  reopen  the  settlement  under 
the  Consolidation  Act.  In  this  connection 
we  shall  examine  the  action  of  the  Tax- 
payers' Convention  of  1871,  note  the  dif- 
ference between  the  debt  then  recognized 


and  the  debt  included  in  the  terms  of  the 
Consolidation  Act,  and  examine  the  nature 
of  the  solemn  warning  then  given,  in  the 
name  of  the  taxpayers,  to  holders  and 
purchasers  of  State  boncjs.  Reviewing  the 
political  campaigns  of  1874  and  1876,  and 
the  subsequent  action  of  the  House  of 
Representatives,  we  shall  see  the  extent  to 

.  which  the  settlement  of  the  debt,  under 
the  Consolidation  Act,  was  agreed  to  by 
the  people.  This  done,  the  people'  can 
judge  for  themselves  whether  it  is  to  their 
interest  to  reopen  the  Consolidation 
Act,  and  whether,  in  honor,  they  can  do 
so.  We  shall  next  consider  whether  the 
State  has  the  power,  if  it  have  the  will 
and  moral  right,  to  reject  any  of  the  Con- 
solidation bonds.  We  shall  next  inquire 
whether  the  people  can  afford  to  attach  to 
themselves  the  stain  of  compulsory  read- 
justment or  repudiation,  even  if  in  morals 
it  be  defensible,  and  in  law  it  can  be  main- 
tained. Lastly,  we  shall,  if  practicable, 
show  what  frauds  and  irregularities,  in  the 
issue  of  State  bonds,  have  been  revealed 
from  time  to  time,  giving  the  explanations 
of  those  concerned,  and  describing  the 
effect  of  subsequent  popular  action  and 
decisions  in  the  Courts.  This,  we  think, 
will  cover  the  whole  ground.. 

We  shall,  in  every  case,  give  authority 
for  the  statements  we  make,  in  order  that 
the  public  may  examine  them  for  them- 

I  selves,  and  our  hope  is  that  we  shall  be 
able  to  lay  a  solid  foundation  of  fact  upon 
which  the  General  Assembly  and  the  pub- 
lic can  safely  stand.  In  this  undertaking, 
we  have  no  other  purpose  than  to  save 
the  Democratic  party  from  dangerous  and 
mischievous  action,  and  the  State  from 
ills  without  number  that  must  follow  any 
determination  of  the  Bond  problem  that 
is  not  consistent,  reasonable  and  just. 


ITS  AMOUNT  IN  1868,  1873  AND  1876. 

[From  The  News  axd  Courier,  January  4,  1878.] 

In  considering  the  character  and  vol- 
ume of  the  public  debt  of  South:  Carolina,  , 
there  is,  fortunately,  no  difficulty  in  find-  j 
ing  a  safe  point  of  departure.    The  first  i 
essential  is  to  ascertain  what,  if  any,  is  : 
the  indisputable  debt  of  the  State,  un- 
questioned and  unquestionable.  \Yhat- 
ever  the  divergence  of  opinion  as  to  the 
debt  contracted  at  a  later  period,  there  is 
no  difference  of  view  as  to  the  binding 
nature  of  the  public  indebtedness  existing 
at  the  time  that  Governor  Orr  was  super-  j 
seded  by  Governor  Scott,    No  Bepubli- 
can  has  sought  to  go  behind  this  indebt- 
edness,  and  no  Democrat  has  denied  that 
the  taxpayers  contracted  it  and  are  re- 
sponsible  for  it.    "With  this  indebtedness, 
therefore,  the  State  starts.    There  is  no  1 
difficulty  in  ascertaining  the  amount,  as 
the  statements  of  the  outgoing  officers,  in 
18G8,  were  accepted  and  are  confirmed  by 
their  successors. 

The  Legislature  elected  under  the  Be- 

 —  ^„,^„ . 

construction   Constitution  assembled^  in  j  interest  to  October  1,  1S6S          434,791  52 

Columbia  on  July  6,  1868,  and  on  the  f  ol-  ';  i   

lowing  day  the  message  of  Governor  Orr  i     Debt  October  31,  1S68  §5.842,097  79 

was  read.    In  the  message  he  says  that  on  Besides  the  Old  funded  debt  and  interest 

October  1,   1867,  the  funded  debt  was  up  to  October  1,  1868,  the  Ante-Recon- 

85,407,213,  and  the  interest  due  and  un-  struction  government  is  chargeable  with 

paid  was  $116,861,  making  the  entire  debt  I  the  amount  of  Bills  Eeceivable  outstand- 

85,5.23,576.    This  is  exclusive  of  bonds  j  ing  when  the  Scott  government  was  in- 

and  stocks  issued  between  1860  and  1865  stalled.     The  Act  of  December,  1865, 

for  military  purposes,  amounting,  with  the  |j  gave  authority  to  issue  $500,000  of  Bills 

interest,  to  $2,854,679.    By  Article  XIV  ||  Eeceivable ;  but  Governor  Orr,  in  hismes- 

of  the  Constitution  all  such  debts  "incurred  ij  sage  of  July,  1868,  says  that  it  had  not 

"in  aid  of  insurrection  or  rebellion'"  are  been  found  necessary  to  print  more- than 

declared  "illegal  and  void."    TVe  cannot  jj  $300,000  of  the  bills,   and   that  only 

fix  the  amount  of  interest  on  the  public  jj  $220,000  had  been  actually  issued.  Even 

debt  due  in  Julv,  1868,  w;hen  Governor  j  this  lesser  amount  was  not  outstanding  in 

Orr  went  out  of  office,  as  the  reports  i|  July,  1868.    According  to  Governor  Orr, 

covered  by  his  message  come  down  only  jj  the  amount  of  Bills  Eeceivable  outstand- 


as  late  as  October,  1867.  On  October  31, 
1868,  three  months  after  the  Republican 
officers  took  the  reins,  the  principal  of  the 
debt  (E.  and  E.,  1868-69,  page  26)  was 
$5,407,306,  (agreeing  within  a  few  dollars 
with  the  amount  reported  by'  Governor 
Orr,)  and  the  interest  overdue  and  unpaid 
was  $434,791.  The  total  funded  debt  and 
interest  was  -$5,842,097.  This  is  the  Old 
debt,  as  it  is  called,  existing  in  the  form 
of  bonds  and  stocks,  running  down  from 
the  3  per  cent,  stock  issued  in  1794  in 
payment  of  "Revolutionary  "War  claims" 
to  the  State-House  bonds  of  1866.  The 
several  amounts  are  as  follows: 

Three  per  cent,  stock  $  '  38,836  60 

Fire  Loan  stock,   314,453  89 

New  State -House  stock   1,775,000  00 

Funded  debt   1,282,971  27 

Fire  Loan  bonds   484,444  51* 

Blue  Ridge  Railroad   1,000,000  CO 

New  State-House  bonds   511,600  00 

Old  funded  rtaht...  :  407  RC)A  07 


6 


ing  on  May  1,  1868,  was  $135,687.  In  his 
message  of  November  27,  1868,  Governor 
Scott  reports  that  the  amount  of  these 
bills  then  outstanding  was  $160,000.  This 
is,  as  nearly  as  can  be  ascertained,  the 
amount  for  which  the  Orr  government  is 
responsible.  The  whole  $300,000  of  bills 
that  had  been  printed  were  at  some  later 
day  in  circulation.  Governor  Orr  had 
signed  $322,000,  and  Governor  Scott  signed 
the  remaining  $78,000,  and  used  them  as 
collateral  security  for  a  State  loan.  By  the 
Act  of  August,  1868,  the  Governor  was 
authorized  to  borrow  not  exceeding 
$500,000  to  redeem  the  Bills  Receivable. 
Only  $300,000  had  been  printed,  and  the 
Special  Joint  Committee,  appointed  in 
1874,  report  (R.  and  R.,  1874-75,  page 
727)  that  only  $298,702  of  the  bills  were 
redeemed. 

There  was  still  another  unfunded  debt 
of  the  Ante-Reconstruction  government, 
viz :  the  bills  of  the  Bank  of  the  State. 
Governor  Orr  was  confident  that  the 
State  could  not  be  held  liable  for  these 
bills.  The  Supreme  Court  of  the  United 
States  has  made  the  State  liable,  in  decid- 
ing that  these  bills  are  receivable  for 
taxes.  This  liability  existed,  therefore, 
at  the  time  that  the  Republicans  obtained 
possession  of  the  Government.  They  did 
not  await  the  action  of  the  Supreme 
Court,  but  in  1868  authorized  the  funding 
of  the  bills,  with  interest,  in  State  bonds 
at  par.  Treasurer  Parker  under  date  of 
May  24,  1869,  reported  (R.  and  R.  1869-70, 
page  82)  that  the  amount  of  bills  received 
for  funding  was  $1,194,392,  and  the  inter- 
est $65,742,  making  a  total  of  $1,260,134. 
Messrs.  Rainey,  Bosemon  and  Crews,  un- 
der date  October  16,  1869,  reported  that 
they  had  received,  examined  and  de- 
stroyed bills  to  the  amount  of  $1,194,392. 
This  was  not  an  extravagant  amount,  as 
Mr.  Furman  reported  to  the  Legislature 
in  1868  that  the  amount  then  outstand- 
ing of  such  bills  as  were  afterwards 
funded  was  $1,422,956.     Whether  the 


Legislative  committee,  in  1869,  did  or  did 
not  effectually  destroy  the  funded  bills 
does  not  affect  the  present  question. 
We  can  now  show  the  Old  or  Ante- 


Reconstruction  funded  and  unfunded 
debt: 

1.  Bonds  and  stocks   $5,407,306 

2.  Interest  to  October  31,  1868. .  434,791 

3.  Bills  receivable   160,000 

4.  Bills  of  Bank  of  State  and  in- 
terest  1,260,134 


Old  debt  $7,262,231 


This  xwas  the  clear,  indisputable  debt  of 
the  State,  already  incurred  when  the  Re- 
publicans, under  the  Reconstruction  Con- 
stitution, came  into  office.  It  is  a  debt 
for  which  the  people  were  responsible, 
and  which  they  would  have  had  to  meet 
if  the  Government  had  remained  in  the 
hands  of  the  white  citizens.  Republican 
profusion  and  misrule  have  no  lot  or 
part  in  it,  except  so  far  as  the  Democrats 
could,  and  would,  have  made  better 
terms,  with  the  holders  of  the  bills  of  the 
Bank  of  the  State,  than  the  Republicans 
found  it  advantageous  to  themselves  to 
propose. 

The  public  debt  soon  began  to  increase 
With  startling  rapidity.  In  the  different 
years  the  total  debt,  as  reported  to  the 
General  Assembly,  was  as  follows : 

October  31,  1869  $  6,667,793 

October  31,  1870   7,665,908 

October  31,  1871   15,851,327 

October  31,  1872.   15,851,327 

October  31,  1873   15,851,627 

The  high-water  mark  was  reached  in 
1873.  Although  the  largest  increase, 
over  eight  million  dollars,  is  between 
October  31,  1870,  and  October  31,  1871,  a 
large  part  of  the  bonds  first  reported  at 
the  latter  day  were  undoubtedly  in  use,  as 
collateral  security  for  State  loans  and 
otherwise,  when  the  mendacious  report  of 
October  31,  1870,  was  published.  This 
was  discovered  by  the  Committees  ap- 
pointed by  the  Taxpayers'  Convention  of 
1871.    The  debt  as  reported  on  October 


7 


31,  1873,  was  composed  of  the  following 
issues  of  stocks  and  bonds : 

Old  stock  $1,374,782  84 

Old  bonds   2,676,744  51 

$4,051,527  35 

Bills  Receivable  bonds, 

Act  August  26,  1868   484,000  00 

Funding  Bank  bills,  bonds, 

Act  September  15,  1868   1,189,600  00 

Interest  Public  Debt  bonds, 

Act  August  26,  1868   1,197,000  00 

Relief  of  Treasury  bonds., 

Act  February  17,  1869   856,000  00 

Conversion  bonds, 

Act  March  23, 1869   7,542,500  00  j 

Conversion  stock, 

Act  March  23,  1869   64,000  00 

Land  Commission  bonds, 

Acts  March  27,  1869,  and 

March  1,  1870   487,000  00 


Debt  October  31,  1873.. $15,851,627  35 
The  amounts  of  bonds  and  stocks  re 
ported  under  each  head,  in  the  foregoing 
statement,  are  not  necessarily  the  entire 
amount  issued  under  the  several  Acts  of 
Assembly.  For  example,  the  whole  amount 
of  Land  Commission  bonds  issued  under 
the  Acts  of  March  27,  1809,  and  March  1, 
1870,  was  $700,000,  but  only  $467,000  of 
these  bonds  were  in  existence  in  October, 
1873,  the  remainder  having.been  converted  j 
into  Conversion  bonds  or  stocks  under  the 
fruitful  Act  of  March  23,  1869. 

The  Consolidation  Act  went  into  opera- 
tion on  December  22,  1873,  the  clay  on 
which  it  was  approved.  And  on  Octo- 
ber 31,  1876,  the  public  debt  was  as  fol- 
lows : 

1.  Old  bonds  and  stocks, 
Acts  1794-1S68  $1,840,243  ! 


2.  Reconstruction  bonds  and  stocks, 

Acts  1868-1870   935,250 

3.  Consolidation  bonds  and  stocks, 

Act  December  22,  1873   4,338,757 

Debt  October  31,  1876  $7,114,250 

This  was  the  debt  at  the  time  that  the 
present  State  Government  was  elected. 
There  is  an  error  of  $5,000  in  the  addi- 
tion ($7,109,250)  given  in  the  Comptrol- 
ler's report,  dated  October  31,  1876. 

The  public  debt  of  the  State  on  March 
31,  1877,  when  the  funding  under  the  Con- 
solidation Act  was  suspended,  is  given  by 
Treasurer  Leaphart  (R.  and  R.  1877-78)  as 
follows: 

1.  Old  bonds  and  stocks, 

Acts  1794-1S66  $1,828,001  54 

2.  Reconstruction  bonds  and 

stocks, 

Acts  1883-1870   876,550  00 

3.  Consolidation  bonds  and 

stocks, 

Act  December  22,  1873          4,396,290  44 

Debt  March  31,  1877  $7,100,841  98 

The  debt,  in  both  1876  and  1871,  con- 
sisted, it  will  be  seen,  of  three  general 
classes  :  1,  the  Old  bonds  and  stocks 
whicn  had  not  been  converted  under  the 
Consolidation  Act;  2,  the  Reconstruc- 
tion bonds  and  stocks  which  had 
not  been  so  converted;  3,  the  Con- 
solidation bonds  and  stocks,  issued 
at  the  rate  of  fifty  cents  on  the  dol- 
lar for  the  bonds  and  stocks,  and  interest 
thereon,  authorized  to  be  so  consolidated 
by  the  Act  of  December  22,  1873.  The 
consolidation  of  the  debt  was  not  com- 
plete. What  was*  the  operation  of  the 
Consolidation  Act  will  be  more  particu- 
larly explained  hereafter. 


ORIGIN,  TERMS,  AND  OPERATION  OF  THE 
CONSOLIDATION  ACT. 

[From  The  News  and  Courier,  January  5,  1878.] 


We  have  already  shown  the  amount  of 
the  unquestioned  and  unquestionable  pub- 
lic debt  of  the  State,  and  the  amount  of 
the  funded  debt  at  successive  periods  and 
at  the  present  time.  The  salient  facts  are 
that  the  Old  debt  (funded  and  unfunded) 
which  was  $7,262,231  on  October  31, 
1868,  rose  to  a  funded  debt  of  $15,851,627 
on  October  31,  1873,  and,  under  the  ope- 
ration of  the  Consolidation  Act  of  Decem- 
ber 22,  1873,  had  declined  on  March  31, 
1877,  to  $7,100,841.  We  have  now  to 
consider  the  nature  and  general  terms  of 
the  Consolidation  Act,  and  to  show  what 
the  debt  will  be  if  the  funding  under  that 
Act  be  completed, 

In  1873  there  was  a  financial  dead-lock 
in  South  Carolina.  No  interest  on  the 
public  debt  had  been  paid  since  July, 
1871.  There  was  no  use  in  levying  a  tax 
sufficient  to  pay  an  annual  interest 
charge  of  about  a  million  dollars,  for  the 
people  had  already  been  taxed  to  the  last 
extremity,  and  could  pay  no  more.  Nor 
would  they  have  paid  the  tax  if  they 
could.  The  High  Joint  Committee  had 
submitted  its  report,  charging  that  vast 
frauds  had  been  committed  and  that 
there  had  been  enormous  over-issues  of 
State  bonds.  During  the  State  canvass, 
in  the  previous  year,  when  Tomlinson  ran 
against  Moses,  the  dark  deeds  of  the  Re- 
publicans had  been  ruthlessly  exposed, 
the  chief  assailant  of  Messrs.  Chamberlain 
and  Moses  being  no  less  a  person  than 
Mr.  D.  T.  Corbin.  The  people  were  in 
no  humor  to  stand  fresh  exactions,  and 
the  State  officers  felt  that  it  was  a  para- 
mount necessity  to  get  rid,  by  hook  or  by 


crook,  of  the  flagrantly  fraudulent  debt, 
and  to  put  the  remainder  in  a  shape  that 
would  be,  in  some  respects,  satisfactory 
to  both  the  bondholder  and  the  public. 
To  the  latter  was  offered,  as  a  tempting 
bait,  a  reduction  of  the  debt  to  about  two- 
fifths  of  its  amount  ;  and  to  the  forrner 
was  presented  a  hedged-in  and  fenced- 
about  security  which  should,  at  once, 
commaud  a  high  price,  and  so  compen- 
sate the  holder  for  the  loss  of  one-half  of 
the  principal  of  the  debt.  The  Consolida- 
tion Act  was  framed,  and  on  December 
22,  1873,  became  a  law. 

Briefly  stated,  the  provisions  of  the 
Consolidation  Act  are  that  the  State  Trea 
surer  shall  issue,  to  the  holders  of  the 
bonds  and  stocks  described  in  the  Act, 
Consolidation  bonds  or  stock  to  the 
amount  of  fifty  per  cent,  of  the  face 
value  of  such  bonds  or  stocks,  with  the  in- 
terest thereon,  up  to  January,  1874;  that 
no  interest  shall  be  paid  on  the  bonds  and 
stocks  described  in  the  Act,  so  long  as 
they  remain  unconsolidated;  that  the  Con- 
solidation bonds  and  stocks  issued  under 
the  Act  "shall  bear  upon  their  face  the 
"declaration  that  the  payment  of  the  bi- 
tterest and  the  redemption  of  the  prin- 
cipal is  secured  by  the  Jevy  of  an  annual 
"tax  of  two  mills  upon  the  dollar  upon 
"the  entire  taxable  property  of  the  State; 
"which  declaration  shall  be  considered  a 
"contract  entered  into  between  the  State 
"and  every  holder  of  said  bonds  and 
"stock;"  that  the  coupons  and  interest  cer- 
tificates of  the  Consolidation  bonds  and 
stock  "shall  be  received  in  payment  of  all 
"taxes  due  the  State  during  the  year  in 


9 


" which  they  mature,  except  for  tax  levied 
"for  the  public  schools;"  that  it  shall  he  a 
felony  for  any  officer  of  the  State  to  ne- 
glect or  refuse  to  perform  any  duty  de- 
volved upon  him  under  the  provisions  of 
the  Act.  The  Act,  it  must  he  remem- 
bered, was  probably  drawn  with  an  eye  to 
the  terms  of  the  decision  of  the  Supreme 
Court  in  the  case  of  Morton,  Bliss  &  Co. 
This  decision  indicated  modes  "whereby 
a  public  creditor  could  be  placed  in  a  posi- 
tion to  enforce  his  claims  against  the 
State. 

As  shown  in  a  previous  article  the  pub- 
lic debt  on  October  31,  1873,  was: 


Old  stock  $1,374,782  84 

Old  bonds   2,676,744  51 


$4,051, 527  35 

Bills  Receivable  bonds, 

Act  August  26,  1868   481,000  00 

Funding  Bank  bills  bonds, 

Act  September  15,  1S6S   1,189,600  00 

Interest  Public  Debt  bonds, 

Act  August  26,  1S6S. .......  1.197.000  00 

Relief  of  Treasury  bonds, 

Act -February  17,  1S69   856,000,00 

Conversion  bonds, 

Act  March  .23,  1869   7.542,500  00 

Conversion  stock, 

Act  March  23,  1869    64,000  00 

Land  Commission  bonds, 

Acts  March  27,   1869,  and 

March  1,  1S70   467,000  00 

Debt  October  31,  1873. .  .$15,551,627  35 
The  bonds  and  stocks  for  which  f:the 


faith,  credit  and  funds  of  the  State"  are 
pledged  by  the  Consolidation  Act  are  as 


follows : 

1.  Bevolutionary  Vv"ar  claims  stock, 

Act  of  1794  .$  33,836  60 

Charleston  Fire  Loan  stock, 

Act  June  1,  1838..   303,343  89 

Charleston  Fire  Loan  bonds, 

Act  June  1,  1S3S   481,944  51 

Xew  State-House  stock, 

Acts  1856,  '57,  '58,  :59,  '61 

and  -63  '   953, 1SS  41 

New  State-House  bonds, 

Acts  1853,  '54  and  '66. ,  *         298,600  00 


Funding  Public  Debt  stock, 
Acts  September  and  December, 

1866   79,413  94 

Funding  Public  Debt  bonds, 
Acts  September  and  December, 

1866   930,200  00 

Blue  Pddge  Railroad  bonds, 
Act  December  1854   966,000  00 


Old  bonds  and  stocks. .:. 64.051, 527  35 


2.  Bills  Receivable  bonds, 

Act  August  26,  1868   484,000  00 

Funding  Bank  bills  bonds, 

Act  September  15,  1S6S  1,189,600  00 

Interest  Public  Debt  bonds, 

Act  August  26,  1868  1,197,000  00 

Belief  of  Treasury  bonds, 

Act  February  17.  1869   856,000  00 

Conversion  bonds, 

Act  March  23,  1S69  1.577,500  00 

Conversion  stock, 

Act  March  23,  1869   64,000  00 

Land  Commission  bonds, 

Acts  March  27,    1889,  and 

March  1,  1S70  '. .  467,000  00 


Reconstruction  bonds  and 
stocks  $5,835,100  00 

(  Adding  the  two  classes  of  debt  together, 
we  have,  as  the  debt  fundable  under  the 
Consolidation  Act : 

Old  bonds  and  stocks  $4,051,527 

Reconstruction  do   5.835,100 


Debt  to  be  funded  $9,886,627 

Debt  October  31,  1873  15,851,627 


Repudiated  in  Consolidation  Act  .  .'$5,965,000 

The  bonds  repudiated,  amounting  to 
So, 965, 000,  are  Conversion  bonds.  In 
March,  1869,  the  General  Assembly  passed 
an  Act  to  provide  for  the  conversion  of 
State  securities.  This  Act  authorizes  the 
issue  of  State  bonds  in  lieu  of  State  stock, 
and  of  State  stock  in  lieu  of  State  bonds. 
The  single  and  evident  purpose  of  the  Act 
was  to  allow  of  the  conversion  of  one 
kind  of  security  into  another.  There  was 
;  the  incidental  advantage  that  the  bonds 


I 


o 


and  stocks  issued  under  the  Conversion 
Act  would  be  of  uniform  tenor  and  date, 
and,  as  a  well-understood  security,  would 
be  regularly  dealt  in,  and  so  have  an  in- 
creased market  value.  It  was  established, 
however,  by  the  investigations  which  took 
place  in  1871  and  1872,  that  Conversion 
bonds,  to  a  large  amount,  had  been  issued 
for  which  no  equivalent  stocks  or  bonds  had 
been  turned  in.  These  Conversion  bonds, 
instead  of  representing  an  equal  amount 
of  other  funded  indebtedness  of  the  State, 
represented  only  the  necessities  and  rapa- 
city of  the  State  officers  who  put  them  on 
the  market.  The  Conversion  bonds  had 
really  been  regarded  as  choice  securities, 
and  there  are  to-day,  in  different  parts  of 
the  Union,  scores  of  persons  who  are 
pinched  in  means,  if  not  reduced  to  beg- 
gary, by  reason  of  the  loss  sustained  by 
purchasing  these  bonds,  at  prices  ranging 
as  high  as  75  and  80.  "Whatever  the 
wrong  so  done  the  purchasers,  who  had 
no  means  of  knowing  that  the  bonds  were 
improperly  issued,  there  is  no  manner  of 
doubt  that  such  bonds  were  put  forth 
without  any  authority  of  law.  The  Re- 
pubiican  officers  in  South  Carolina,  ready 
always  to  profit  by  their  own  wrong,  re- 
pudiated these  bonds.  In  the  language  of 
the  Consolidation  Act :  "The  bonds  known 
"as  the  Conversion  bonds,  amounting  to 
"$5,965,000,  and  which  were  put  upon  the 
'  'market  without  any  authority  of  law,  be, 
"and  the  same  are  hereby,  declared  to  be 
"absolutely  null  and  void."  No  steps  have 
been  taken,  so  far  as  we  know,  to  hold  to 
account  the  State  officers  (Governor  Scott, 
Attorney-General  Chamberlain  and  the 
rest)  by  whom  these  bonds  were  issued. 
The  loss  has  fallen  on  the  unsuspecting 
purchasers  of  bonds  which  were,  in  their 
eyes,  as  unquestionably  good  and  genuine 
as  if  they  had  borne  on  their  face  the 
names  of  Hampton  and  Hagood. 

It  will  be  noted  that  the  Consolidation 
Act  recognizes  a  million  and  a  half  of 
Conversion  bonds.    These  bonds,  like  the 


Conversion  stock  likewise  recognized, 
were  issued  properly,  under  the  law,  in 
exchange  for  an  equal  amount  of  bonds 
and  stocks  of  the  State.  The  Conversion 
bonds  repudiated  by  the  Act  of  Decem- 
ber 22,  1873,  when  the  Republicans  had  a 
two-thirds  majority  in  both  branches  of 
the  General  Assembly,  comprise  the  whole 
amount  of  Conversion  bonds  placed  at 
any  time,  and  in  any  way,  in  the  hands  of 
the  Financial  Agent,  H.  II.  Kimpton. 
Their  repudiation  excised  the  ulcer  of 
fraud  from  the  State  debt.  The  same 
agencies  wrought  the  disease  and  worked 
the  cure. 

The  whole  amount  of  bonds  and  stocks 
authorized  to  be  funded  under  the  Con- 
solidation Act  was  $9,886,627.  The  esti- 
mate of  the  former  State  Treasurer  was 
(R.  and  R.  1876-77,  p.  4)  that  when  the 
funding  under  the  Act  was  completed 
"the  entire  valid  debt  of  the  State  will  be 
"$6,183,759."  This,  however,  is  an  over- 
estimate. Both  the  interest,  to  January  1, 
1874,  and  the  principal  of  the  bonds 
and  stocks  recognized  by  the  Consolida- 
tion Act  were  required  to  be  funded;  but 
Treasurer  Leaphart  in  his  report  (R.  and 
R.,  1877-78,  p.  4)  shows  that  the  interest 
on  the  repudiated  Conversion  bonds  "has 
"never  been  eliminated  from  the  general 
"interest  account,"  and  he  estimates  that 
"the  outstanding  interest  convertible  into 
"Consolidation  bonds  and  stocks  may  be 
'  'reduced  to  an  amount  less  than  $500, 000. " 
This  enables  us  to  determine,  more  accu- 
rately than  before  his  report  was  pub- 
lished, the  final  result  under  the  Consoli- 
dation Act.  We  have  shown  that  on 
March  31,  1877,  the  debt  was : 

Consolidation  bonds  and  stock. . .  .$4,396,290 
Unconsolidated   2,704,551 


Total  debt  $7,100,841 

The  unconsolidated  debt,  and  the  $500,- 
000  of  interest  mentioned  by  Treasurer 
Leaphart,  remain  to  be  funded  at  50  cents 
on  the  dollar,  and  when  the  funding  is 


1 


I 


completed  the  debt  will,  therefore,  stand : 

Already  consolidated  $4,396,290 

To  be  consolidated: 

Principal  $2,704,551 

Interest   500,000 

$3,204,551 

At  50  cents   1,602,275 

Whole  debt  $5,998,565 


With  the  amount  of  the  debt  under 
this  settlement  we  compare  the  amount  of 
the  unquestionable  Old  debt,  which  was 
$7,262,231. 

And  we  compare  with  it  the  amount  of 


the  debt  on  October  31,  1873,  which  was 
$15,851,627. 

It  is  only  proper  to  add,  in  this  place, 
that  we  opposed  the  Consolidation  Act, 
up  to  the  time  of  its  passage,  for  the  rea- 
son that  we  considered  it  grossly  unjust 
to  place  the  Old  debt,  for  which  the  State 
had  received  dollar  for  dollar  in  gold,  on 
the  same  footing  as  the  Reconstruction 
debt,  which  represented  large  payments, 
perhaps,  by  the  bondholders,  but  nothing 
or  next  to  nothing  in  the  way  of  beneficial 
value  received  by  the  State.  Since  the 
Act  was  passed  we  have  treated  the  settle- 

!  ment  of  the  debt,  thereby  to  be  effected, 

I  as  absolutely  final. 


•J 


DIFFERENT  MODES  OF  RE-ADJUSTMENT. 

[From  The  News  and  Courier,  January  7,  1878.] 


It  must  be  presumed  that  the  present 
General  Assembly  desires  to  effect  a  per- 
manent settlement  of  the  public  debt.  With- 
out the  consent  of  the  people,  given  at  a 
general  election,  the  public  debt  cannot, 
in  any  way,  be  increased,  and,  so  soon  as 
the  present  discussions  and  investigations 
are  at  an  end,  a  favorable  change  in  the 
financial  situation  may  be  expected,  pro- 
vided always  that  the  action  of  the  Gen- 
eral Assembly  confirm  confidence  in  the 
fidelity  of  the  people  to  their  obligations. 
There  is  no  room  to  doubt  that  the  out- 
standing 6  per  cent,  bonds  can,  as  they 
become  due,  be  redeemed  by  the  substitu- 
tion of  other  bonds,  bearing  a  lower  rate 
of  interest.  What  the  United  States  is 
doing,  the  States,  under  similar  condi- 
tions, may  hope  to  accomplish. 

Absolute  justice  to  the  creditors  of 
South  Carolina,  it  may  be,  is  incompati- 
ble with  a  small  debt.  The  persons  who 
bought  Conversion  bonds  at  the  Financial 
Agency  in  New  York  prior  to  the  start- 
ling revelations  made  in  1871  had  no  sus- 
picion, and  could  not  have  had,  that  they 
were  giving  their  money  for  bonds  fraud- 
ulently issued.  The  law  authorized  the 
issue  of  Conversion  bonds,  and  the  Con- 
version bonds  they  bought  were  regularly 
signed,  countersigned  and  sealed.  The 
criminals,  the  persons  who  should  have 
been  made  to  suffer,  were  the  State  offi- 
cers who  sent  the  bonds  to  New  York, 
who  attached  their  names  to  them,  who 
were  aware  of,  and  who  authorized, 
the  uses  to  be  made  of  them.  The 
purchasers  of  the  bonds  had  no  finger 
in  the  rascally  work.  Nevertheless 
the  Republican  Legislature  of  1873  repu- 
diated the  whole  of  the  improperly  issued 


Conversion  bonds.  Nothing  effective  was 
said  or  done  against  the  Kimptons,  Par- 
kers, Scotts  and  Chamberlains.  The  Re- 
publicans chuckled  at  their  own  smart- 
ness, in  issuing  nearly  six  million  dollars 
of  bonds  without  authority  of  law,  and 
then  rejecting  those  bonds  because  they 
were  illegally  issued.  With  the  repudia- 
tion, as  with  the  issue  of  the  bonds,  the 
taxpayers,  the  Democracy,  had  nothing  to 
do.  They  found  the  public  debt,  when 
they  came  into  power,  in  process  of  reduc- 
tion to  less  than  six  million  dollars.  At 
one  blow  the  Republicans,  unmindful  of 
the  unfortunate  holders,  had  repudiated  a 
mass  of  bonds  for  which  the  State  officers 
had  received  large  sums  of  money.  The 
Republicans  alone  are  responsible  for  the 
cruel  remedy,  as  for  the  shameful  disease. 
Only  for  the  gravest  reasons  could  the 
General  Assembly  consent  to  reopen 
the  settlement,  under  the  Consolidation 
Act,  and  seek  a  readjustment. 

It  is  claimed,  in  some  quarters,  that  the 
Consolidation  Act  is  injurious  to  the 
bondholders  and  unjust  to  the  State.  The 
question  for  the  General  Assembly  to  de- 
mine  is,  whether  the  State  can  make  any 
other  approximately  equitable  settlement 
equally  beneficial  to  the  State,  and  whether 
the  State  can  afford  to  make  any  settlement 
more  advantageous  to  the  bondholders, 
past  and  present.  We  think  it  can  be 
demonstrated  that  the  settlement  under 
the  Consolidation  Act  is  the  easiest  and 
most  beneficial  that  can  be  made,  short 
of  wholesale  and  undisguised  repudiation. 

I.  The  first  of  the  proposed  plans  of  re- 
adjustment involves  casting  out  the  Re- 
publican bonds,  representing  debts  con- 
tracted by  the  Republicans,  and  recog- 


13 


nizing  the  whole  of  the  bonds  and  other 
liabilities  outstanding  when  the  Republi- 
cans came  into  office.  This  mode  is 
fairly  summed  up  by  the  Winnsboro'  News 
as  follows : 

1.  The  honest  debt  of  the  State  should  be 
paid  dollar  for  dollar. 

2.  The  fraudulent  debt  of  the  State  should 
be  repudiated  dollar  for  dollar. 

In  order  to  give  the  supporters  of  this 
mode  every  advantage,  we  will  assume, 
for  the  sake  of  argument,  that  all  the 
bonds  representing  debts  contracted  since 
1868  are  ••fraudulent."*  There  is  no  diffi- 
culty in  determining  what  is  "the  honest 
"debt  of  the  State.'*  in  the  sense  in  which 
these  words  are  commonly  used.  It  is 
the  debt,  funded  and  unfunded,  existing 
when  Governor  Orr  went  out  of  office. 
This  debt  is  to  be  paid  ''dollar  for  dollar." 
It  is  as  follows  : 

1.  Bonds  and  stocks  $5,407,306 

2.  Interest  to  October  31,  1868. . .  434,791 

3.  Bills  Receivable   160,000 

4.  Bills  of  Bank  of  State   1,260,134 


Honest  debt  §7,262,231 


Of  these  bonds  and  stocks,  $1,828,001 
remain  unconsolidated,  and  $3,579,305 
have  been  consolidated.  To  be  just,  the 
State  must  pay  the  persons  who  funded 
their  bonds  what  they  have  lost  by  so 
funding.  They  shall  get  "dollar  for  dol- 
"lar"  of  principal,  and  are  entitled  to  in- 
terest at  six  per  cent,  on  the  half  of  the 
principal  they  sacrificed  under  the  Consol- 
idation Act,  on  which  sacrificed  half  of  the 
principal  they  have  had  no  interest.  They 
received  Consolidation  bonds  for  one  half 
the  amount  of  principal  and  interest,  due 
and  over  due,  to  January  1,  1874,  and 
have  received  the  interest,  or  possess  the 
coupons  for  the  interest,  on  that  half.  In 
justice,  therefore,  they  should  be  allowed 
five  years'  interest,  at  6  per  cent.,  on  an 
amount  equal  to  the  amount  of  Consoli- 
dation bonds,  representing   Old  bonds, 


now  outstanding.  This  amount  is  at 
least  two  million  dollars,  and  six  year's  in- 
terest to  July  1,  1877,  on  that  amount,  at  6 

.  percent.,  will  amount  to  $720,000.  We 
must  likewise  take  into  account  the  fact 

:  that,  on  the  unfunded  Old  bonds  and 
stocks,  no  interest  has  been  paid  since 
Juh*,  1871.    The  amount  of  these  seeuri- 

|!  ties  being,  (as  the  last  debt  statement 
shows,)  $1,828,001,  the  interest  to  July  1. 
1877,  six  years,  at  G  per  cent. ,  will  lie 
$658,000.  The  total  debt,  under  the 
"dollar  for  dollar"  adjustment,  will  lie 

I  as  follows  : 
1.  "Honest  debt"  $7,262,231 

;   2.  Interest  on  half  of  Consolidated 

1  'honest  debt' '   720,000 

3.  Interest     on  unconsolidated 

"honest  debt"   60S, 000 


At  "dollar  for  dollar"  $8,640,231 

Under  the  Consolidation  Act,  as  it  stands, 
the  whole  debt  will  be  $5,998,665.  The 
[j  new  mode,  therefore,  breaks  up  the  ad- 
justment,   nearly    completed,    made  in 
1873,    repudiates    absolutely  the  bonds 
issued  for  the  Relief  of  the  Treasury,  for 
Interest  on  the  Public  Debt,  and  for  the 
Land  Commission,  as  well  as  the  Consoli- 
dation bonds  representing  such  bonds, 
j  and  makes  the  public  debt  ($8,640,231,  as 
j  against  $5,998,665.)  at  least  $2,641,50fi 
I  more  than  under  the  Consolidation  Act, 
which  Act  involves  no  repudiation  or  in- 
justice for  which  the  present  government 

I  is  responsible. 

II.  A  second  mode  of  adjustment  is  to 
recognize  the  Old  bonds  as  before,  and  to 
recognize  the  Republican  bonds,  to  the 
extent  of  the  money  actually  received  for 
them,  by  or  for  account  of  the  State.  The 
supporters  of  this  mode  are  willing  enough, 
they  say,  to  pay  back  what  money  was 
actually  derived  by  the  State  from  the 
.|  Republican  bonds.  It  is  somewhat  diffi- 
cult to  determine  accurately  what  money 
was  realized  by  the  sale  of  the  bonds,  but 

II  we  have  been  able  to  make  a  statement 


I 


4 


which  is  sufficiently  exact  for  our  present 
purpose.  The  whole  amount  of  bonds 
delivered  to  Financial  Agent  Kimpton  was 
$9,514,000,  (R.  and  R,  1874-75,  p.  10,)  as 
follows : 

Bills  Receivable  $  500,000 

Land  Commission   700,000 

Relief  of  Treasury   899,000 

Payment  of  interest   1,450,000 

Conversion  bonds   5,965,000 

$9,514,000 

To  this  must  be  added  $200,000  of  State 
bonds  bought  for  account  of  the  Sinking 
fund.  The  sales  of  bonds  are  reported  as 
follows: 

R  &  R.  1869-'70.  .$  300,000  for  $  210,000 

1870-  '71..     700,000  "  490,000 

1871-  '72..  2,843,000  "  1,503,783 

1872-  '73..  4,214,500  "  1,238,344 

Total  $8,057,500  for  $3,442,127 

And  we  find  (R.  &  R.,  1875-76,  p.  94) 
that  the  following  sales  were  made  of 
bonds  held  as  collaterals : 

$    126,500    in  bonds  for   $  12,851 
350,000  "  92,134 

250,000  "  63,819 

720,000  "  180,445 

200,000  "  47,340 

$1,646,500    in  bonds  for  $396,589 

The  general  result  of  the  sales  of  bonds 
is  * 

$8,057,500  sold  for  $3,442,127 
1,646,500     "    "  396,589 

$9,704,000  sold  for  $3,838,716 

The  State  realized  43  cents  on  the  dollar 
from  the  eight  million  dollars  of  bonds 
put  upon  the  market.  Only  $79,000  of 
Conversion  bonds  are  shewn  to  have  been 
in  the  hands  of  the  Financial  Agent,  or 
under  hypothecation,  as  far  back  as  Octo- 
ber, 1872.  The  inference  is,  that  among 
the  $8,057,500  of  bonds  sold  before  the 
end  of  1872  were  over  $5, 000, 000  of  the 
Conversion  bonds  which  were  afterwards 


repudiated.  In  point  of  fact,  the  bulk  of 
the  money  realized  by  the  State  came  from 
the  Conversion  bonds  which,  we  estimate, 
sold  for  considerably  over  $2,000,000.  It 
may  be  objected  that,  while  the  State  offi- 
cers received  the  money,  the  public  did 
not  derive  any  benefit  from  it.  This  line 
cannot  be  pursued  far.  As  well  might 
one  claim  a  return  of  the  money  paid  in 
the  form  of  State  taxes,  on  the  ground 
that  it  was  wasted.  The  State  officers  re- 
ceived the  money,  and  beyond  that,  under 
the  mode  we  are  now  considering,  we 
cannot  go.  Under  the  second  mode  of 
adjustment  then  the  debt  would  be: 

Old  funded  debt  $5,407,306 

Proceeds  of  bonds  sold   3,838,716 

Second  form  of  adjustment. .  49,246,022 


This  mode  of  adjustment,  unequal  and 
unjust  in  many  respects,  makes  the  debt 
(the  difference  between  $9,246,022  and 
$5,998,665)  at  least  $3,247,357  more  than 
under  the  Consolidation  Act,  and  the  in- 
crease will  be  still  larger  if  we  add,  as  we 
properly  may,  the  interest  on  the  Old 
funded  debt  of  $5,407,306. 

III.  A  third  mode  is  to  recognize  the 
Consolidation  bonds  and  stocks  represent- 
ing the  Old  debt,  reject  all  other  post- 
Reconstruction  bonds  and  stocks,  and 
complete  the  funding  of  the  Old  debt 
under  the  Consolidation  Act. 
The  Old  debt,  October  31,  1868, 

as  previously  shown,  was  $5,407,306 

Interest  from  October  31,  1869,  to 

January  1,  1874   811,095 

$6,218,401 

Interest  on  Old  debt  to,  October 
31,  1868   434,791 

$6,653,192 

This  Old  debt,  funded  at  50  per 

cent.,  is  $3,326,596 

Bills  Receivable   160,000 

Bank  State  bills  and  interest   1,260,134 

Total  debt  $4,746,730 


I 


5 


This  would  make  the  debt  more  than 
a  million  dollars  less  than  under  the 
Consolidation  Act ;  but  at  what  cost  !  One 
half  of  the  Old  debt  for  which  the  State 
received  dollar  for  dollar,  in  gold,  is  repu- 
diated utterly,  and  no  provision  is  made 
for  any  of  the  New  debt.  In  such  a  plan 
as  this  there  is  no  high  principle,  and  no 
consistenc}^;  it  is  bald,  brutal  repudiation. 

Other  modes  of  adjustment  have  been 
suggested.  One  is  to  let  the  Consolidation 
bonds  stand  which  represent  Old  bonds,  ' 


and  to  recognize,  at  their  face,  the  un- 
funded Old  bonds.  This  is  a  more  mons- 
trous proposition  than  the  others,  as  it  in- 
volves the  repudiation  of  one-half  of  the 
principal  of  the  bonds  held  by  those  who 
were  willing  to  compromise  with  the  State 
in  1874,  and  since ;  and,  at  the  same  time, 
!  gives  the  last  farthing  to  those  inexorable 
creditors  who  sullenly  held  aloof,  and 
gave  the  State  no  aid  in  her  extremity. 
Under  this  bastard  arrangement  the  debt 
would  be  about  $3,000,000. 


OBJECTIONS  TO  PROPOSED  MODES  OF  RE- 
ADJUSTMENT. 

[From  The  News  and  Courier,  January  8,  1878.] 


In  a  previous  article  we  have  shown 
the  effect  of  two  of  the  proposed  modes  of 
readjusting  the  public  debt.  One  of  these 
contemplates  the  recognition  of  the  Old 
or  Ante-Keconstruction  debt,  and  the  re- 
pudiation of  the  Republican  debt;  the 
other  contemplates  the  recognition  of  the 
Old  debt,  and  also  the  recognition  of  the 
Republican  debt  to  the  extent  of  the 
amount  realized,  by  or  for  account  of  the 
State,  from  sales  of  Republican  bonds. 
Under  the  first  mode  the  debt  will  be 
$2,641,568  more  than  under  the  Consoli- 
dation Act  of  December  22,  1873,  and 
under  the  second  mode  the  debt  will  be 
$3,247,357  more  than  under  the  Consoli- 
dation Act. 

We  have  laid  stress  upon  these  two 
modes,  and  have  explained  their  opera- 
tion in  detail,  for  the  reason  that  they  are 
the  only  modes  of  readjustment  that  have 
been  suggested  which  are  consistent  and  in- 
telligible. The  saline  statuary  who  con- 
tinue to  look  back  while  the  political 
world  moves  forward,  may,  without  self- 
stultification,  take  the  position  that  the 
State  Government,  from  1868  to  1876, 
was  "revolutionary  and  void,"  and  that 
the  people,  the  white  citizens,  are  not  re- 
sponsible for  any  debt  contracted  by  the 
"usurpers."  They  are  ready,  therefore,  to 
pay  the  Old  debt  to  the  uttermost  penny, 
and  will  pay  nothing  else.  Another 
group  of  politicians  take  the  ground 
that  the  State  is  responsible  for  what 
money  the  State  actually  received  from 
the  sales  of  bonds.  When  we  pass  be- 
yond the  modes  proposed  by  these  two 
groups  of  readjusters,  we  come  to  open 


and  undisguised  repudiation.  Such  is, 
any  proposition  to  scale  the  Old  debt, 
while  repudiating  the  whole  of  the  Re- 
publican debt,  or  to  give  to  the  unfunded 
Old  bonds  a  better  position,  or  higher 
value,  than  is  possessed  by  the  Old  bonds 
which  have  been  funded. 

As  a  matter  of  money,  the  settlement, 
nearly  completed,  under  the  Consolidation 
Act,  is  incontestibly  cheaper  than  any 
other  settlement  of  a  non-repudiating 
character.  It  is  true  that  the  Consolida- 
tion Act  accomplishes  this  by  a  scaling 
which  may  be  regarded  as  disguised  re- 
pudiation ;  but  this  scaling  was  not  the 
work  of  the  present  Government,  nor  was 
it  sanctioned,  in  any  way,  by  the  Democ- 
racy, until  it  had  been  clothed  with  the 
force  of  law.  The  settlement,  in  many 
respects,  was  undesirable,  but  the  public 
had  grown  up  to  it,  or  settled  down  to  it, 
and  had  come  to  regard  it  as  final.  There 
would  not  have  been  any  talk  of  readjust- 
ment, had  it  not  been  supposed  that  the 
extent  of  the  frauds,  in  connection  with 
the  debt,  had  never  been  made  known 
fully,  and  that  a  failure  to  investigate  the 
debt  would  leave  the  State  liable  for  an  in- 
definite amount  of  spurious  bonds  and 
stocks.  This  is  a  popular  fallacy  which 
we  have  helped  to  explode. 

Assuming,  for  the  moment,  that  the 
State  is  ready  to  reopen  the  debt  question, 
and  can  afford  to  adopt  one  of  the 
two  modes  of  readjustment  previously 
described,  it  is  worth  while  to  inquire 
who  would  be  benefited  by  such  read- 
justment, and  whether  it  is  practicable  to 
accomplish  what  the  advocates  of  the  two 


modes  must  be  presumed  to  desire.  The 
fundamental  principle,  in  each  mode,  is 
to  pay  back,  dollar  for  dollar,  the  money 
the  State  actually  received  from  the  per- 
sons who  bought  bonds  of  the  State. 

The  Old  debt  on  October  31,  1868,  as 
previously  shown,  was  (exclusive  of  the 
unfunded  interest)  $5,407,306;  but  the 
amount  of  Old  bonds  and  stocks  out- 
standing on  October  31,  1873.  (before  the 
Consolidation  Act  had  passed)  vras  only 
$4,051,527.  Nearly  a  million  and  a  half 
dollars  of  the  Old  debt  had  been  converted 
into  other  State  bonds  or  stocks,  under 
the  operation  of  the  Conversion  Act  or 
otherwise.  When  the  State  is  ready  to 
pay  dollar  for  dollar  upon  the  Old  debt, 
how  will  she  deal  with  so  much  of  that 
debt  as  was  converted  into  Xew  debt 
prior  to  October  31,  18T3  ?  Would  it  be 
practicable  to  divest  every  bond  of  its 
various  disguises  ?  And  if  every  bond 
can  be  brought  back  to  its  first  estate, 
should  the  benefit  of  the  State's  action  go 
to  the  present  holders  of  the  unfunded  and 
the  funded  Old  bonds,  or  to  those  who  were 
their  owners  in  1868  ?  Less  than  two 
million  dollars  of  Old  bonds  and  stocks 
remained  unfunded  on  March  31,  18TT. 
The  remaining  three  million  dollars  of 
Old  debt  of  October  31,  1868,  have  been 
consolidated,  or  are  outstanding  in  the 
form  of  Conversion  bonds,  fundable 
under  the  Consolidation  Act.  It  is  entire- 
ly safe  to  say  that  nine  out  of  ten  of 
the  Old  bonds  and  stocks  which  have 
been  consolidated,  or  converted,  have 
passed  out  of  the  possession  of  those  who 
owned  them  in  1868.  The  sellers,  in 
selling,  reserved  nothing;  the  buyers,  in 
buying,  took  the  bonds  and  stocks  as 
they  were.  While  the  State  would,  no 
doubt,  desire  that  the  original  holder,  in 
1868,  who  sold  his  bonds  before  or  after 
funding,  should  get  the  benefit  of  any 
additional  value  proposed  to  be  conferred 
upon  the  Old  debt,  it  is  pretty  certain  that, 
in  law.  the  present  holders  of  the  bonds 


II  would  be  entitled  to  that  additional  value. 
Under  the  Consolidation  Act,  the  State  can 
reduce  the  principal  of  the  Old  funded  debt 
(exclusive  of  interest)  to  about  $2,500,000. 
The  dollar-for-dollar  mode  of  readjust- 
ment will  require  the  State  to  pay  twice 
as  much,  and  the  bulk  of  the  additional 
two  and  a  half  millions  will  flow  into  the 
pockets  of  the  present  holders  of  the 
bonds  and  stocks  now  representing  the 
Old  debt,  which  bonds  and  stocks  they 
have  bought  at  prices  ranging  from  50  to 

!  60  cents  on  the  dollar.  It  would  be  a 
magnificent  speculation  for  the  bond- 
holders, and  a  losing  business  for  the 

!  State.  In  fine,  there  lies  at  the  root  of 
even"  proposition  to  reopen  the  Consoli- 
dation Act  the  virtual  impossibility  of  giv- 
ing the  advantage  of  any  better  terms  than 
those  of  the  Consolidation  Act  to  the  per- 
sons, if  any,  entitled  to  that  advantage. 
On  the  other  hand,  the  completion  of  the 
settlement  under  the  Consolidation  Act 
plays  into  the  hands  of  no  set  of  specula- 

:;  tors,  inasmuch  as.  for  years,  it  had  been 
assumed  that  the  Consolidation  Act  would 
not  be  reopened. 

Similar  difficulties  are  encountered  when 
it  is  proposed  to  compensate  the  purchas- 
ers of  Republican  bonds,  to  the  extent  of 
the  money  they  paid  the  State.  Do  the 
persons  who  thus  bought  the  bonds  still 
hold  them  ?  Moreover,  as  previously  ex- 
plained, more  than  two  millions  of  money 
received  by  the  State  came  from  the  Con- 

.  version  bonds  repudiated  by  the  Republi- 
cans in  1873.    Is  it  too  much  to  ask  that, 

1  in  any  new  adjustment,  the  claims  of  the 
holders  of  these  bonds,  for  which  the  State 

1  got  the  money,  shall  be  fully  recognized? 
It  may  be  said,  however,  that  if  the  State 
cannot  make  any  sweeping  change  in  the 
debt  settlement  of  1873,  the  State  can 
pick  and  choose  among  the  outstanding 
bonds,  and,  on  various  pretexts,  discard 
some  and  confirm  others.  The  assump- 
tion is,  that  the  parentage  of  any  Consoli- 

,   dation  bonds,  now  out,  can  be  clearly 


I 


8 


traced.  This  cannot  be  done.  On  March 
31,  1877,  Consolidation  bonds  to  the 
amount  of  $4,155,000  were  outstanding, 
and  we  have  every  reason  to  believe  that 
we  are  well  within  bounds  in  saying  that, 
as  to  at  least  one-half  of  these  bonds,  it  can- 
not be  told  whether  they  represent  funded 
Old  bonds  or  funded  Republican  bonds. 
Under  the  Consolidation  Act  several  classes 
of  bonds  were  fundable.  Bonds  belonging 
to  four  or  five  different  classes  frequently 
went  to  the  Treasury,  in  one  lot,  for  con- 
solidation. In  exchange  for  fifty  thousand 
fundable  bonds,  ranging  in  kind  from  Old 
bonds  to  the  latest  issue  of  Republi- 
can bonds,  the  State  (exclusive  of  in 
terest)  would  issue  $25,000  of  Con- 
solidation bonds.  On  the  register  the 
$25,000  so  issued  would  be  entered 
against  the  $50,000  so  received.  Where 
the  lots  were  mixed,  no  particular 
Consolidation  bond  represents  any  par- 
ticular bond  that  was  funded.  When  the 
Consolidation  bonds  reached  their  desti- 
nation they  were  given  to  the  owners  of 
the  funded  bonds,  and  were  scattered  be- 
yond recognition.  One  Consolidation  bond 
was  regarded  as  fully  as  good  as  another. 
Some  persons  will,   of  course,  suggest 


that,  where  the  character  of  any  of  the 
bonds  is  in  doubt,  the  State  should  take 
the  benefit  of  the  doubt  and  reject  the 
whole.  This  is  not  a  tenable  position.  It 
is  for  the  State  to  prove  vthat  the  bonds 
are  bad ;  not  for  the  holders  to  prove  that 
they  are  good. 

We  think  we  have  demonstrated  that, 
as  a  matter  of  money,  it  is  not  to  the  in- 
terest of  the  people  of  the  State  to  reopen 
the  settlement  of  the  debt  under  the  Con- 
solidation Act,  and  that,  short  of  repu- 
diation pure  and  simple,  it  is  the  most  ad- 
vantageous settlement  that  can  be  effected. 
We  think  we  have  shown  likewise  that 
any  adventitious  advantages  now  proposed 
to  be  given  to  any  class  of  bonds,  funded 
or  unfunded,  will  enure  to  the  advantage 
of  speculative  holders  rather  than  to  the 
benefit  of  the  persons,  if  any,  who,  in  the 
first  instance,  were  injured.  And  we  have 
also  shown  some  of  the  practical  diffi- 
culties in  the  way  of  singling  out,  for  re- 
pudiation, particular  bonds  issued  un- 
der the  Consolidation  Act.  The  next 
step  in  the  inquiry  is  to  consider  the  na- 
ture and  effect  of  the  action  of  the  Tax- 
payers' Convention  of  1871,  in  relation  to 
the  debt  of  the  State. 


TAX-PAYER'S  CONVENTION  OF  1871 


[From  The  News  and  Courier,  January  9,  1878.] 


South  Carolina  early  in  18T1  was  throb- 
bing with  excitement.  Delegations  repre- 
senting the  Conservative  citizens  had  had 
interviews  with  Governor  Scott,  who  was 
profuse  in  his  promises  and  vociferous  in 
his  pleadings  for  peace.  The  Ku-Klux 
still  haunted  the  State  officers  in  their 
dreams,  and  no  man  could  tell  whether 
the  sharp  reaction  from  the  liberalism  ex- 
hibited by  the  Democrats  in  the  Reform 
canvass,  the  preceding  summer,  would  not 
grow  in  intensity  and  plunge  the  State 
into  worse  troubles  than  those  which  gave 
congenial  employment  to  the  Circuit  Court 
of  the  United  States,  sitting  at  Columbia, 
As  early  as  March,  it  became  known  that 
it  was  the  determination  of  the  State 
authorities  to  collect  two  annual  taxes  in 
the  course  of  the  year.  Four  million  dol- 
lars, in  less  than  twelve  months,  were  de- 
manded of  the  people.  Confiscation,  un- 
der the  forms  of  law,  stared  in  the  face 
every  citizen  who  had  come  honestly  by 
his  property.  And  while  the  taxes  collect- 
able in  one  year  had  risen  from  8400,000 
a  year,  before  the  war,  to  over  $4,000,000 
in  1871,  the  bonded  debt  of  the  State  was 
rolling  on,  like  a  snow-ball,  growing  as  it 
went,  On  October  31,  1870,  the  public 
debt  was  reported  to  be  (R  and  R.,  1870- 
71,  p.  57)  only  87,665,908;  but  The 
Charleston  Xews  confidently  asserted 
that  this  was  millions  below  the  true 
figure.  It  was  no  time  for  rose-water 
remedies,  and  The  News,  in  a  series 
of  articles,  irresistible  in  their  por- 
traiture of  the  wrongs  and  sufferings  of 
the  people,  advocated,  as  the  only  means 
of  safety,  the  calling  of  a  Convention  of 
the  taxpayers  of  the  State,  to  ponder  the 
situation  and  do  what  brave  and  saga- 


:'  cious  men  might  to  redress  the  public 
grievances.  The  course  recommended  met 
with  general  favor,  and,  on  March  30,  a 
meeting  was  held  at  the  rooms  of  the 
Chamber  of  Commerce  "to  consider  the 
"financial  condition  of  the  State,  as  affect- 
ing the  commercial  interests  and  pros- 
perity of  Charleston.''  The  meeting 
was  largely  attended,  and  the  preamble 
and  resolutions  presented  by  Mr.  Ravenel 
were  unanimously  adopted.  They  were 
drawn  by  the  writer  of  this  article.  The 

.  preamble  set  forth  the  fact  that  the  ma- 
jority of  the  taxpayers  and  property- 
holders  were  denied  any  practical  power 
in  the  Legislature  and  in  the  imposition 
of  taxes;  that  the  nione}-  raised  by  tax- 
ation was  excessive  in  amount,  and  was 
improvidently  and  corruptly  expended; 
that  the  credit  of  the  State  had  been 
pledged  illegally,  and  that  it  was  proposed 
to  pledge  the  credit  of  the  State  for  fur- 
ther loans  "which  may  be  negotiated  in 

I  "the  market  to  persons  who  may  take 
"them  in  ignorance  of  the  circumstances 
"under  which  they  are  issued."  This  fur- 
ther loan  was  the  proposed  Sterling  Loan 
Fund  of  86,000,000.  The  resolutions  declar- 
ed (1)  that  "the  bonds  heretofore  issued 

1  "without  legal  sanction,  and  the  so-called 
"Sterling  loan,  or  aii}T  other  bonds  or  obli- 

!  "gations  hereafter  issued  purporting  to  be 

I  "under,  and  by  virtue  of,  the  au- 
thority of    the    present    State  Gov- 

I  "eminent,  itill  not  be  field  binding  on 
'  'us,  and  that  we  shall,  in  every  manner  and 

\\  "at  all  times,  resist  the  payment  thereof, 
"or  the  enforcement  of  any  tax  to  pay  the 
"same,  by  all  legitimate  means  within  our 
"power/'  and  declared  (2)  that  "we  deem  it 

II  "our  duty  to  warn  all  persons  not  to  re 


20 


"ceive,  by  way  of  purchase,  loan  or  other- 
wise, any  bond  or  obligation  Jiereaft&r 
"issued,  purporting  to  bind  the  property 
"or  pledge  the  credit  of  the  State;  and 
"that  all  such  bonds  or  obligations  will  be 
"held  by  us  to  be  null  and  void,  as  having 
"been  issued  in  derogation  of  the  rights 
"of  that  portion  of  the  people  of  this  State 
"upon  whom  the  public  burdens  are  made 
"to  rest;"  and  requested  (3)  that  the  tax- 
payers, in  the  several  counties,  do  meet  and 
consider  this  subject,  and  appoint  two 
delegates  to  represent  each  county  in  a 
State  Convention  to  be  held  in  Columbia 
on  the  second  Tuesday  in  May!  There 
was  a  prompt  and  general  response,  and 
when  the  Convention  convened  in  Colum- 
bia on  May  9,  1871,  every  county  in  the 
State  was  represented. 

The  phraseology  of  the  Charleston  reso- 
lutions was  plain  and  precise.  They 
conveyed  a  solemn  warning  to  the  public 
that  the  taxpayers  of  South  Carolina  would 
not  be  held  responsible  for  any  bonds, 
or  other  obligations,  that  had  been  illegal- 
ly issued,  or  that  might  thereafter  be 
issued.  It  was  fancied  that  the  resolu- 
tions smacked  of  repudiation,  and  this 
feeling  elicited  a  letter  from  Gen.  M.  W. 
Gary,  which  will  be  recalled  with  interest 
at  this  time.  The  letter  is  dated  Pine 
Bluff,  Ark.,  April  17,  1871.  Gen.  Gary 
says: 

"Since  leaving  home  I  have  interchanged 
views  with  quite  a  number  of  distinguished 
men  of  the  Democratic  party,  and  with  per- 
sons of  financial  reputation,  and  I  find  that  a 
misapprehension  prevails  as  to  the  object  and 
intentions  of  the  people  of  our  State  touch- 
ing our  present  indebtedness.  As  I  understand 
the  resolutions  of  the  Board  of  Trade  and 
Chamber  of  Commerce  of  Charleston,  they 
refer  to  any  further  indebtedness  of  the  State, 
but  the  impression  is  abroad  that  they  look 
to  a  repudiation  of  the  entire  State  indebted- 
ness. 

"I  fully  appreciate  and  endorse  the  feeling 
that  has  prompted  our  taxpayers  to  give 
warning  to  the  party  now  in  power  that 
■any  additional  indebtedness,  created  by  cor- 
ruption and  fraud,  will  not  be  paid. 


11  Repudiation  by  either  States  or  individuals  is 
a  very  dangerous  alternative,  and  should  be 
resorted  to  only  to  prevent  a  more  dire 
calamity — the  confiscation  of  our  lands,  and 
the  expatriation  of  ourv  best  people.  "VVe 
have  lost  all  save  honor  in  the  late  struggle 
for  Constitutional  liberty,  and  before  we 
part  with  that,  we  should  suffer  and  endure 
until  the  keeping  the  public  promises  are 
'more  honored  in  the  breach  than  in  the  ob- 
servance.' " 

A  representative  body  higher  in  charac- 
ter and  more  eminent  in  ability  than  the 
Taxpayers'  Convention  has  never  been 
seen  in  South  Carolina.  Among  the  dele- 
gates were  Gen.  Hagood,  now  Comptroller- 
General,  Gen.  Chesnut,  Judge  Aldrich, 
Mr.  Henry  Gourdin,  Mr.  G.  A.  Trenholm, 
Col.  Wm.  Wallace,  ex-Governor  Man- 
ning, ex-Governor  Bonham,  General  M. 
C.  Butler,  now  United  States  Senator, 
Gen.  M.  W.  Gary,  now  State  Senator, 
Gen.  W.  H.  Wallace,  Speaker  of  the 
"Wallace  House,"  Col.  W.  M.  Shannon, 
Mr.  Armistead  Burt,  Gen.  Cannon,  now 
State  Senator,  Col.  Evins,  now  member 
of  Congress,  Col.  Thos.  Y.  Simons  and 
Mr.  W.  D.  Porter,  who  was  chosen  Presi- 
dent. We  confine  our  review  to  the  pro- 
ceedings in  connection  with  the  public 
debt.  For  the  rest,  it  can  be  truthfully 
said  that  the  Convention  of  1871  was  the 
first  long  step  towards  the  ultimate  re- 
demption of  South  Carolina.  On 
the  second  day  Col.  Simons  intro- 
duced the  resolutions  which  had  been 
adopted  in  Charleston.  These  were  re- 
ferred to  the  Executive  Committee,  who 
recommended  their  adoption,  and  they 
were  so  adopted,  as  follows : 

Resolved,  That  this  Convention,  represent- 
ing the  property-holders  and  taxpayers  of  the 
State  of  South  Carolina,  do  hereby  deem  it 
our  duty  to  declare,  that  the  so-called  Sterling 
Loan,  or  any  other  bonds  or  obligations,  here- 
after issued,  purporting  to  be  under  and  by 
virtue  of  the  authority  of  this  State,  as  at 
present  constituted,  will  not  be  held  binding 
onus;  and  that  we  recommend  to  the  people 
of  the  State,  in  every  manner,  and  at  all 


21 


times,  to  resist  the  payment  thereof,  or  the 
enforcement  of  any  tax  to  pay  the  same,  by 
all  legitimate  means  within  their  power. 

Hiso-ved,  That  we  deem  it  our  duty  to  warn 
all  persons  not  to  receive,  by  way  of  pur- 
chase, loan  or  otherwise,  any  bond  or  obliga- 
tion Thereafter  issued  by  the  present  State  Govern- 
ment, or  by  any  subsequent  government,  in 
which  the  property-holders  of  the  State  are 
not  represented,  purporting  to  bind  the  prop- 
erty or  pledge  the  credit  of  the  State:  and 
that  all  such  bonds  or  obligations  will  be  held 
to  be  null  and  void,  as  having  been  issued  in 
fraud  and  in  derogation  of  the  rights  of  that 
portion  of  the  people  of  this  State  upon 
whom  the  public  burdens  are  made  to  rest. 

At  the  fourth  day's  session  the  Commit- 
tee of  Eleven,  (Messrs.  M.  C.  Butler,  Cad- 
wallader  Jones,  G.  Cannon,  B.  W.  Ball, 
W.  H.  Wallace,  R.  Lathers,  A.  M.  Lowry, 
G.  A.  Trenholm,  E.  J.  Scott,  TT.  B.  Smith, 
and  T.  C.  TTeatherly,)  to  whom  had  been 
referred  resolutions  regarding  the  finan- 
cial condition  of  the  State,  submitted  an 
elaborate  report.  They  reported  the  funded 
debt  of  the  State  to  be  $7,665,908,  and 
say  : 

"To  the  sum  of  the  funded  debt,  viz  ■ 
$7,665,908  98,  must  be  added,  in  order  to 
exhibit  the  sum  total  of  the  debt  of  the  State, 
the  cash  advanced  to  the  Treasury  by  the 
Financiil  Agent.  This  is  set  down  by  Mr. 
Kimpton  at  the  round  sum  of  £800,000,  and 
also  the  further  sum  of  .$400,000  for  bonds 
sold  by  Mr.  Kimpton  since  the  date  of  the 
Comptroller's  report,  viz :  making  a  grand 
total  of  debt  of  $8,865,908  98. 

"The  sum  total  of  bonds>emaining  unsold 
in  the  hands  of  the  agent,  as  already  shown 
by  the  Comptrollers  statement,  wan  £2,200,- 
000.  From  this  amount  must  be  now  de- 
ducted the  amount  sold  as  above  stated, 
$400,000,  leaving  $1,800,000.  This  amount 
of  bonds,  namely,  $1,800,000,  is  pledged  for 
the  security  of  the  $800,000  of  cash  advanced 
by  the  agent. ;; 

As  the  result  of  the  deliberations  of  the 
Committee  they  recommend  the  adoption 
of  the  following  resolution  : 

Resolved,  as  the  sense  of  this  Convention, 
that  the  funded  debt  of  the  State,  as  described 


in  the  report  of  the  Committee  of  Eleven  of 
this  body,  is  a  valid  debt,  and  that  the  honor 
a?idjund,s  of  the  Stoie  are  lawfully  pledged  for 
the  redemption  thereof. 

To  recapitulate  :  The  Committee  of 
Eleven  reported  that  the  funded  debt  of 
the  State  was  : 

Comptroller's  Report  $7,665,908 

Bonds  since  sold   400,000 

Bonds  in  hands  of  Financial  Agent  1,800.000 


Debt  in  May,  1871  $9,865,908 


There  was  not,  and  is  not,  any  doubt 
that  the  Convention  knew  the  wants  and 
wishes  of  the  people,  and  when  the  Con- 
vention declared  that  bonds  and  stocks 
amounting  to   $9,865,908  were  a  valid 
debt,  for  the  payment  of  which  the  honor 
and  funds  of  the  State  were  lawfully 
pledged,  the  people  were,   m  morals, 
bound     by     its     action.     And  when 
that  Convention  solemnly  declared  that 
any  bonds  or  obligations  issued  there- 
after w-ould  be   held  to    be  null  and 
void,  they  gave  full  notice  and  ample 
warning  to  the  public.    The  recognition 
of  the  existing  debt  and  the  repudiation 
of    any    subsequent    obligation  went 
together,  and  are  inseparable.    The  Con- 
vention, while  notifying  the  public  what 
bonds  and  stocks  would  be  held  to  be  null 
and  void,  notified  the  public  likewise 
what  bonds  and  stocks,  or  what  amount 
of  bonds  and  stocks,   were  valid  and 
binding.    Unless  the  State  adheres  to  the 
terms  of  its  ratification  of  the  existing 
debt  in  1871,  it  cannot  plead,  as  against 
the  holders  of  obligations  subsequently 
made,  the  warning  given  by  the  Conven- 
tion.   This   principle  has  an  important 
application.    The  public  debt,  as  recog- 
nized and  ratified  by  the  Taxpayers'  Con- 
vention,  amounted  to  $9,865,908.  The 
debt  recognized  and  reaffirmed  by  the 
Consolidation  Act  of  December  22,  1873, 
amounts  to  $9,886,627.    There  is  a  differ- 
ence of  only  $20,719  between  the  amount  of 
j  debt  recognized  in  1871,  and  the  amount 


22 


of  debt  authorized  to  be  funded  in  1873. 
By  sloughing  off  the  $5,965,000  of  Conver- 
sion bonds  (such  bonds  as  the  Taxpayers' 
Convention  declared,  in  advance,  would 
be  held  to  be  null  and  void)  the  Republi- 
can Convention,  in  1873,  brought  back  the 
debt  to  within  a  few  thousand  dollars  of 
its  amount  as  published  to  the  world  in 
May,  1871.  In  substance,  moreover,  the 
debt  is  the  same  in  kind,  as  well  as  in 
amount.  The  following  table  gives  both 
the  debt  recognized  by  the  Taxpayers' 
Convention,  and  the  debt  fundable  under 
the  Consolidation  Act : 

Convention.  Consolidation 
Old  debt,  1871.  Act. 

Acts  1794-1866. .  .$4,407,956  $4,051,527 
Bills  Receivable, 

Act  Aug.  26, 1868.  500,000  484,000 
Funding  Bank  bills, 

Act  Sept.  15,1868.  1,192,150  1,189,600 
Interest  public  debt, 

Act  Aug.  26, 1868.  800,000  1,197,000 
Relief  of  Treasury, 

Act  Feb.  17,  1869.  1,000,000  856,000 
Conv'n  bonds  &  stock, 

Act  March  23, 1869  1,265,800  1,641,500 
Land  Commission, 

Actsl869-'70   700,000  467,000 


Totals  $9,865,906  $9,886,627 


The  increase  in  the  amount  of  Conver- 
sion bonds  and  stock,  fundable  under 
the  Consolidation  Act,  represents  the 
amount  of  other  bonds  and  stocks  pre- 
viously exchanged  for  Conversion  bonds 
and  stock;  and  the  diminution  in  the 
amounts  of  other  bonds  and  stocks 
is  accounted  for  by  such  conversions. 
The  only  other  increase,  it  will  be 
noted,  is  in  the  bonds  issued  under  the 
Act  of  August  26,  1868,  for  the  Payment 
of  the  Interest  on  the  Public  Debt.  Of 
these  bonds  two  sets,  of  $1,000,000  each, 
were  printed,  the  second  set  being  in- 
tended to  supply  the  place  of  the  first. 
The  Committee  of  Eleven  of  the  Taxpay- 
ers' Convention  say  in  their  report  (page 
111)  that  ' '$500,000  (of  the  first  set)  were 


"long  since  returned  and  cancelled,  as 
"appears  by  the  assurances  given  to  your 
"Committee  by  the  Comptroller  and 
"Treasurer.  Upon  the  authority  of  Mr. 
"Kimpton,  Agent,  and  Mr.  Parker, 
"Treasurer,  it  appears  also  that  a  further 
"sum  of  $400,000  has  been  returned 
"within  a  few  days.  These  ham  not 
"yet  been  cancelled.  Mr.  Kimpton  also 
"assured  the  Committee  that  the  re- 
gaining $100,000  would  soon  be  re- 
"turned;  that  there  was  not  any  longer 
"delay  in  effecting  the  exchange  than 
"arose  from  the  necessity  of  waiting  until 
"the  several  loans  matured,  for  which  the 
"first  bonds  had  been  pledged."  In  the 
debt  recognized  by  the  Committee  only 
$1,000,000  of  the  Interest  bonds 
were  apparently  included,  and  $200,- 
000  of  these  had  been  converted  into 
Conversion  bonds  prior  to  October  31, 
1870.  There  is,  therefore,  an  apparent 
over-issue  of  the  Interest  bonds  to  the 
extent  of  the  difference  between  $800,000 
recognized  by  the  Convention,  and  $1,197,- 
000  recognized  by  the  Consolidation  Act. 
This  is  $397,000,  to  which  should  be 
added  $53,000  of  such  bonds  funded  in 
Conversion  bonds  in  the  year  ending  Oc- 
tober 31,  1872,  making  the  apparent  over- 
issue $450,000.  This  is  within  the  amount 
of  such  bonds  returned  to  the  Treasury, 
"not  yet  cancelled,"  or  in  the  hands 
of  the  Agent.  These  bonds  would, 
at  the  first  glance,  appear  to  be  excluded 
from  the  benefit  of  any  recognition  by  the 
Convention.  But  the  Act  of  August  26, 
1868,  does  not  limit  the  amount  of  bonds 
to  be  issued,  and,  as  a  matter  of  fact,  the 
public  had  no  means  of  telling  what  par- 
ticular bonds  and  stocks  were  approved 
by  the  Convention.  No  list  was  given,  be- 
yond the  list  published  the  previous  year 
by  the  Comptroller.  The  declaration 
that  $2,200,000  of  other  bonds  were  out- 
standing, "and  were  of  unquestionable 
"legality  and  force  as  obligations  of  the 
"State,"  (Proceedings,  page  111,)  would 


23 


leave  the  public  room  for  believing  that  I 
the  whole  of  the  Interest  bonds  were  prop,  j 
erly  issued.  And  this  view  would  be  con- 
firmed by  finding  them  among  the  bonds 
provided  for  in  the  Consolidation  Act. 
Again,  of  the  Old  debt  ratified  and  ap-  j 
approved  by  the  Taxpayers'  Convention,  l| 
bonds  to  the  amount  of  $203,000  fell  due 
on  July  1,  1871,  and  were  redeemed.  (R. 
andR,  1871-72,  page  514.)    As  the  first 
$8,000,000  of  bonds  sold  by  the  Republi- 
can Administration  realized  only  43  cents  \\ 
on  the  dollar,  the  State  did  reasonably 
well,   as  things  went,   in  substituting 
$450,000  of  new  bonds,  having  20  years 
to  run,  for  $203,000  of  matured  bonds. 

TTe  find  then  that  the  warning  given  by 
the  Taxpayers'  Convention  in  1871  does  | 
not  apply  to  the  bonds  and  stocks  pro-  :' 
vided  for  in  the  Consolidation  Act  of  ( 
1873;  that  the  Convention  formally  ratified 
bonds  and  stocks  virtually  the  same,  in 
amount  and  kind,  as  the  debt  covered 
by  the  Consolidation  Act ;  that  the  action  j 
of    the    Republicans,     in  repudiating 
$5,965,000  Conversion  bonds,  as  issued  I 


'•'without  authority  of  law,"  and  absolute- 
ly "null  and  void,"  brought  the  Consoli- 
dation Act,  in  respect  of  the  amount  of 
the  debt,  into  harmony  with  the  declara- 
tions of  the  Taxpayers'  Convention. 
When  it  is  remembered,  in  addition,  that 
the  Consolidation  Act  reduced  the  whole 
debt,  the  debt  recognized  by  ine  Taxpay- 
ers' Convention,  to  fifty  per  cent,  of  its 
par  value,  making  the  debt,  with  interest 
to  January  1,  1874,  only  $5,998,665, 
against  $9,865,906,  without  that  interest, 
under  the  finding  of  the  Convention,  it  is 
amazing  that  there  should  be  any  desire 
to  reopen  the  settlement  under  the  Con- 
solidation Act,  and  it  is  inconceivable 
that  rjij  serious  attempt  should  be  made 
to  brand  any  of  the  bonds  issued,  or  to  be 
issued,  under  the  Act,  as  conceived  in 
fraud  and  tainted  with  corruption.  Far 
from  this,  the  Consolidation  Act,  in  so 
far  as  it  declared  the  amount  of  the  debt, 
was  founded  on  the  bed-rock  of  the  Tax- 
payers' Convention,  and  on  that  firm 
bottom  stands  every  single  bond  issued, 
or  to  be  issued,  under  the  Consolidation 
Act. 


RESULT  OF  DIFFERENT  INVESTIGATIONS. 

[From  The  News  and  Courier,  January  io,  1878.] 


The  settlement  of  the  Public  Debt  of 
South  Carolina  under  the  Consolidation 
Act  of  December  22,  1873,  is,  as  a  matter 
of  money,  more  advantageous  to  the  State 
than  any  other  mode  of  settlement  that 
has  been  proposed,  other  than  barefaced, 
undisguised  repudiation.  And  the  prin- 
cipal of  the  debt  and  interest,  fundable 
under  the  Consolidation  Act,  is  substan- 
tially, in  both  amount  and  kind,  the 
identical  debt  for  the  redemption  of 
which  "the  honor  and  funds  of  the  State 
"are  lawfully  pleged,"  as  solemnly  de- 
clared by  the  Taxpayers'  Convention  in 
May,  1871.  Yet  it  has  been  reported  that 
the  Bond  Commission,  whose  report  will 
be  submitted  to  the  General  Assembly 
next  week,  have  discovered  huge  frauds, 
amounting  to  a  million  dollars  or  more, 
in  the  bonds  and  stocks  funded  or 
fundable  under  the  Consolidation  Act, 
and  that  the  validity  of  some  of  the  Con- 
solidation bonds  is  in  question.  The 
Commission  keep  their  own  counsel,  and, 
without  pretending  to  foreshadow  their 
conclusions,  we  find  strong  reasons  for 
believing  that  the  current  rumors  are 
echoes  or  rehashes  of  the  results  of  in- 
vestigations, or  charges,  previously  made, 
and  with  which  the  people  of  the  State 
are,  or  were,  familiar.  We  will  state,  as 
briefly  as  is  consistent  with  clearness,  the 
result  of  previous  inquiries. 

I.  The  debt  of  the  State  in  May,  1871, 
as  reported  to,  and  recognized  by,  the 
Taxpayers'  Convention,  was  $9,865,906. 
Before  the  autumn  it  was  ascertained, 
however,  that  a  far  larger  amount  of  bonds 
and  stocks  was  outstanding,  and  in  De- 
cember the  House  of  Representatives 
appointed  a  committee  to  make  an  in- 


vestigation. Mr.  C.  C.  Bowen  submitted 
the  report  of  the  committee  on  December 
14,  1871.  (H.  J.  1871-72,  page  136.)  The 
committee  charge  that,  exclusive  of  the 
issue  of  bonds  for  redeeming  the  bills  of 
the  Bank  of  the  State,  the  issue  of  only 
$3,200,000  of  New  bonds  had  been  au- 
thorized, viz: 

1.  Bills  Receivable  bonds  $  500,000 

Act  August  26,  1868. 

2.  Interest  on  debt  bonds   1,000,000 

Act  August  26,  1868. 

3.  Relief  of  Treasury  bonds   1,000,000 

Act  February  17,  1869. 

Land  Commission  bonds.   700,000 

Acts  1869  and  1870. 

Total  $3,200,000 

The  amount  of  New  bonds  outstanding 
was,  according  to  the  sworn  statement  of 
the  State  Treasurer,  $9,514,000;  the  dif- 
ference between  that  amount  and 
$3,200,000  being  an  over  issue,  amount- 
ing to  $6,314,000.  The  committee 
show  that,  under  the  Act  to  redeem  the 
Bills  Receivable,  the  Governor  was  au- 
thorized to  borrow,  within  twelvemonths, 
not  exceeding  $500,000;  that,  under  the 
Act  to  authorize  a  State  loan  to  pay  the 
interest  on  the  debt,  the  Governor  was  au- 
thorized to  borrow,  within  twelve  months, 
not  exceeding  $1,000,000;  and  that,  under 
the  Act  to  authorize  a  loan  for  the  relief 
of  the  Treasury,  authority  was  given  to 
borrow,  within  twelve  months,  $1,000,000. 
The  committee  report  also  that  the  au- 
thority to  borrow  under  the  Act  of  Feb- 
ruary 17,  1869,  expired  on  February  17, 
1870,  and  that  the  authority  to  borrow 
under  the  two  Acts  of  August  26, 
1868,  (they  having  been  extended  one 
year,)  expired  on  August  26, 1870.  Their 


2 


5 


conclusion  is,  that  there  was  no  authority 
for  any  further  issue  of  bonds,  under  the 
Acts,  after  the  dates  when  the  Acts  ex- 
pired. The  committee  further  say  that 
the  Conversion  Act  of  March  23,  1869, 
"was  not  intended  to  be  used  for  the  pur- 
pose of  increasing  the  State  debt,  but 
"solely  for  "the  conversion  of  some  out- 
standing security."  The  report  was 
signed  by  C.  C.  Bowen,  B.  Byas,  F.  H. 
Frost,  P.  J.  O'Connel  and  W.  H. 
Jones,  Jr. 

II.  The  Joint  Special  Committee  ap- 
pointed at  the  Legislative  session  of 
1870-71  submitted  a  report  under  date  of 
December  20,  1871.  They  reported  that 
they  had  examined  the  books  of  Treasurer 
Parker  and  of  Financial  Agent  Kimpton, 
and  found  that  the  American  Bank  Note 
Company  had  printed,  for  the  State, 
bonds  and  stocks  amounting  to  $22,540,- 
000.    They  account  for  them  as  f ollows : 


In  Treasurer's  office  §  9,072,800 

Cancelled  and  destroyed   1,001,000 

Issued:  Conversion  bonds   1,260,500 

Bank  bills   1,259,000 

Conversion  stock   432,700 


Total  $13,026,000 


This  amount,  deducted  from  the 
total  amount  printed,  leaves  a  balance  of 
$9,514,000,  to  be  accounted  for,  as  in  the 
report  of  the  Bowen  Committee.  The 
Joint  Committee  deduct  $200,000  as 
passed  to  the  credit  of  the  Sinking  Fund 
Commission.  Their  apparent  conclusion, 
not  expressed,  is  that  the  $9,314,000  re- 
maining were  issued  under  the  Bills  Re- 
ceivable  Act,  the  Interest  on  Public  Debt 
Act,  the  Relief  of  the  Treasury  Act,  the 
Land  Commission  Acts,  and  the  Conver- 
sion Act. 

They  say  that  they,  "after  a  careful  and 
"thorough  examination,  are  fully  satisfied 
"that  the  entire  bonded  debt  of  the  State 
"of  South  Carolina  is  $15,767,908  (being 
"what  they  style  $6,453,908  of  ante-war 
"debt,  added  to  the  $9,314,000  of  New 


"debt)  and  has  been  created  in  accordance 
"with  the  several  Acts  authorizing  the 
"issuing  of  State  securities,  *  *  *  for 
"the  reason  that  no  Act  of  the  General 
"Assembly  limited  the  amount  to  be 
"issued,"  and  that  while  bonds  have  been 
issued  since  the  date  fixed  by  law,  they 
were  to  cover  loans  negotiated  previous 
to  the  expiration  of  the  Acts. 

III.  Next  comes  the  full  report  of  the 
famous  High  Joint  Committee  appointed 
at  the  session  of  1870-71,  consisting  of  B. 
F.  Whittemore  and  S.  A.  Swails  on  the 
part  of  the  Senate,  and  J.  B.  Dennis,  W. 
H.  Gardner  and  T.  Hurley  on  the  part  of 
the  House.  The  report  covers  nearly 
three  hundred  pages.  They  report  (pages 
46-7)  the  whole  legitimate  debt  to  be 
$9, 865, 908.  It  is  made  up  as  follows : 
Debt  C.  G.  Report,  Oct.  31,  '70. .  .$7,665,908 

In  hands  of  Financial  Agent: 

Interest  bonds  $  500,000 

Relief  of  Treasury. . . .  1,000,000 

Land  Commission....  700,000—2,200,000 


Total  debt  $9,865,908 

This  is  the  exact  amount  and  kind  of 
debt  approved  by  the  Taxpayers'  Conven- 
tion in  the  preceding  May.  The  High 
Joint  Committee  find  (page  260)  that 
bonds  and  stocks  to  the  amount  of 
$22,540,000  had  been  printed,  and  that,  of 
these  bonds  and  stocks,  $8,500,000,  it  was 
claimed,  had  not  been  used,  making  the 
whole  debt  (page  261)  $14,040,000.  To  this 
amount  the  Committee  subsequently  (page 
263)  add  $1,000,000  of  Conversion  bonds 
(the  second  set  for  Interest  on  Public  Debt) 
and  $200,000  of  bonds  purchased  with  the 
proceeds  of  the  sale  of  the  Agricultural 
Land  Scrip,  making  the  whole  debt 
$15,240,000.  Still  later  (page  267)  the 
Committee  make  the  whole  debt,  (includ- 
ing $200,000  of  Agricultural  Land  Scrip 
bonds)  no  less  than  $16,371,306.  The  final 
conclusion  is  (page  268)  that  the  "fraudu- 
lent issue"  was  $6,314,000.  This  agrees 
with  Report  I. 


26 


IV.  The  next  matter  affecting  the  debt 
was  the  effort  of  Morton,  Bliss  &  Co.  to 
compel  Comptroller-General  Hoge  to  levy 
upon  all  the  taxable  property  in  the  State 
the  tax  necessary  to  raise  a  sum  sufficient 
to  pay  the  interest  due,  and  becoming  due, 
upon  State  bonds  held  by  them.  These 
bonds  belonged  to  five  classes :  1.  Bills  Re- 
ceivable bonds,  Act  August  26,  1868;  2,. 
Interest  on  Public  Debt  bonds,  Act  August 
26,  1868;  3,  Relief  of  the  Treasury  bonds, 
Act  February  17,  1869;  4,  Land  Commis- 
sion bonds,  Acts  of  March  27,  1869,  and 
March  1,  1870.  Proceedings  were  taken, 
by  mandamus,  in  the  State  Supreme 
Court,  and  the  case  was  argued  at  the 
April  term,  1873.  Attorney-General  Mel- 
ton appeared  for  the  State.  He  con- 
tended, amongst  other  things,  that  the 
bonds  in  question  were  not  valid  obli- 
gations of  the  State,  for  the  reason 
that  (1)  they  were  not  sold  at  the  highest 
market  price  as  required  by  law ;  that  (2) 
a  large  portion  of  the  bonds  in  question 
had  been  returned  to  the  Treasury  and  re- 
issued without  warrant  of  law ;  that  (3)  the 
Acts  are  unconstitutional  and  void,  in  that 
they  do  not  levy  a  tax  sufficient  to  pay 
the  annual  interest  of  the  debt  they  con- 
tracted; that  (4)  at  least  $7,191,700  of  the 
$15,851,327  of  public  debt  reported  by  the 
Treasurer  on  October  31,  1873,  is  not  the 
valid  debt  of  the  State,  and  the  bonds  enu- 
merated in  that  report  are  to  that  extent 
outstanding  without  authority  of  law; 
that  (5)  the  registration  of  the  debt  ordered 
by  the  Act  of  March  13,  1872,  was  incom- 
plete. 

V.  At  the  legislative  session  of  1873-74 
a  Joint  Special  Committee  was  appointed 
to  ascertain  what  bonds  of  the  State  were 
pledged  by  the  Financial  Agent  as  collate- 
ral security  for  State  loans,  it  having  been 
alleged  that  of  the  $9,514,000  of  new 
bonds  issued  "during  the  late  Administra- 
tion" the  Financial  Agent  had  received 
>nly  $8,472,000,  and  that  only  $7,757,000 
of   these   bonds   had   been  sold,  leav- 


ing $1,756,500  entirely  unaccounted 
for.  The  Chairman  of  the  Committee 
was  Senator  Dunn,  of  Horry,  afterwards 
Comptroller-General,  who,  under  date  of 
June  17,  1874,  made  a  report  to  Treasurer 
Cardozo  showing  what  bonds  were  under 
hypothecation.  The  Committee  reported 
(R.  and  R.  1874-75,  page  9)  that  among 
the  bonds  hypothecated  were  bonds 
amounting  to  $1,201,000  "pledged 
"by  the  Financial  Agent  subsequent  to 
"the  time  when  the  authority  to  so 
"pledge  them  had  ceased  according  to 
"terms  of  the  several  Acts  creating  them, 
"and  also  subsequent  to  the  time  when 
"the  full  amount  of  money  authorized  to 
"be  borrowed  on  the  said  bonds  had  been 
"obtained."  (See  also  I  and  II.)  The 
bonds  referred  to  are  bonds  issued  under 
the  familiar  Acts  of  August  26,  1868,  and 
February  17,  1869.  The  committee  also 
say  that  among  the  bonds  pledged  by  the 
Financial  Agent  are  $215,000  of  Orr  bonds 
issued  under  the  Act  of  September,  1866, 
to  fund  past  due  interest  on  the  public 
debt.  The  committee  left  it  to  the  Treas- 
urer to  determine  whether  he  would 
not  be  warranted  in  declining  to  fund  the 
designated  bonds  until  the  facts  could  be 
laid  before  the  General  Assembly.  In  their 
full  report  the  committee  (R.  and  R. 
1874-75,  page  723,)  elaborate  the  questions 
raised  in  the  statement  submitted  to  Trea- 
surer Cardozo.  They  insist  that,  under 
the  several  Acts,  only  $3,200,000  in  money 
(see  I  and  II)  could  be  lawfully  raised, 
and  that  $8,057,500  in  bonds  had  sold  for 
$3,442,127;  that,  after  disposing  of  these 
bonds  the  Financial  Agent  still  had  in 
hand  $1,456,500  of  bonds  delivered  to 
him  for  hypothecation  and  sale,  (of 
which  amount  $900,000  had  once  been  re- 
deemed, returned  to  the  Treasury  and  re- 
issued,) as  well  as  $200,000  of  State  bonds 
purchased  for  the  Sinking  Fund  Commis- 
sion, and  $191,800  of  State  bonds  purchased 
with  the  proceeds  of  the  Land  Scrip. 
These  bonds,  amounting  in  all  to  $1,848,- 


2/ 


800,  were  re-hypothecated  at  various  dates, 
from  September  21,  1871,  to  September  10, 
1872,  for  loans  amounting  to  $547,522. 
The  committee,  therefore,  report  that 
the  hypothecation  of  the  $1,848,300  of 
bonds  was  illegal,  because  the  time 
allowed  for  hypothecation  had  expired ; 
the  full  amount  authorized  had  already 
been  obtained,  and  the  hypothecation  of 
the  Sinking  Fund  bonds  and  Land  Scrip 
bonds  was  wholly  illegal. 

VI.  The  next  step  was  the  appointment 
of  a  Special  Joint  Committee  to  ascertain 
what  bonds  and  coupons  had  been  funded 
under  the  Consolidation  Act.  Senator 
Dunn  was  the  chairman  of  the  Committee. 
They  reported  (R  and  R.  1874-75,  p.  652,) 
that  $978,500  of  the  bonds  which  had  been 
funded  belonged  to  the  class  of  bonds 
which  the  Special  Committee  (see  X)  re- 
ported as  having  "been  pledged  "without 
"legal  authority,'"' and  which  should  not 
have  been  "funded  at  all."  Also,  that  de 
tached  coupons  to  the  amount  of  $454,021 
had  been  improperly  funded.  These  in- 
clude the  §300,000  of  coupons  funded  by 
the  late  Y.  J.  P.  Owens. 

It  is  not  necessary  to  give  in  detail  the 
answers  made,  at  different  times,  to  the 
charges  contained  in  the  reports  we  have 
summarized,  or  to  set  forth,  at  length,  the 
explanations  and  counter-explanations  of 
accusers  and  accused.  The  main  points 
can  be  quickly  and.,  it  would  seem,  satis- 
factorily met. 

1.  The  charge  that  there  had  been  an 
over-issue  of  $6,314,000  of  bonds  (see  I 
and  III)  was  dropped  before  December  22, 
1878,  when  $5,905,000  of  Conversion  bonds 
were  declared  "null  and  void/'  at  the  in- 
stance of  those  who  had  illegally  and 
fraudulently  caused  them  to  be  issued. 

2.  The  remaining  amount  of  bonds,  and 
stocks  alleged  to  have  been  over-issued 
represents  the  difference  between  the 
amounts  of  bonds  actually  issued  under 
the  two  Acts  of  August  20,  18G8,  and  the 
Act  of  February  17,  1869,  and  the  niaxi- 


!'  mum  amount  which,   according  to  the 
;  Bowen  Committee,  for  example,  could  be 
issued  lawfully.    A  glance  at  the  Acts  in 
question  shows  that  the  amount  of  money 
to  be  raised  is  specified,  while  the  amount 
of  bonds  to  be  issued  is  not.  Authority  was 
given  in  the  three  Acts  before  mentioned  to 
I  borrow  not  exceeding  $2,500,000,  "on  the 
j!  "credit  of  the  State,  on  coupon  bonds." 

I  There  was  full  authority  to  issue  $10,000,- 
j  000  of  bonds,  if  the  money  could  not  be 

obtained  on  a  less  amount.  In  1868  State 
bonds  were  very  low,  and  could  only  be 
borrowed  on  at  25  or  30  cents  on  the  dollar. 
Knowing  the  character  of  the  State 
officers,  the  public  must  be  surprised  at 
their  moderation.  They  only  issued  (E.  and 
E.  1874-75,  page  12,)  bonds  to  the  amount 
of  $2,849,000. 

3.  The  next  allegation  is  that  State 
bonds  were  hypothecated  after  the  ex- 
piration of  the  time  allowed  by  law  for 
such  hypothecation.    This  allegation  has 
||  been  renewed  from  time  to  time,  and  is 

II  as  lively  to-day  as  when  Senator  Dunn 
and  Mr.  T.  S.  Cavender  resuscitated  it  in 
1874.  The  error  appears  to  lie  in  treat- 
ing the  last  hypothecations  as  if  they  had 

:  been  the  first.  The  first  hypothecation 
I  was  in  1868  or  1869,  and  the  loans  were 
renewed  from  that  time.  The  facts  were 
known  to  the  General  Assembly  when  the 
Consolidation  Act  was  passed,  and  when 
Senator  Dunn  invited  Attorney-Gen.  Mel- 
!!  ton  to  prevent  the  funding  of  the  bonds 
alleged  to  have  been  improperly  hypothe- 
cated, that  officer  declined  to  interfere.  He 
said  (E.  andE.  74-75,  p.  469  :)  "I  deemed 
"it  my  duty  to  decline  to  take  the  action 
"proposed  by  Senator  Dunn,  and  intima- 
"ted  to  him  that,  in  my  judgment,  the 
"interests  of  the  State  demanded  that  I 
"should,  on  the  contrary,  resist  any  pro 
"ceeding  which  would  operate  to  im- 
"pede  or  hinder  the  successful  accom- 
plishment of  the  scheme  which  had  been 
"adopted  by  the  Legislature  for  the  settle- 
ccment  of  the  bonded  debt  of  the  State. 


28 


"The  amount  of  bonds  obnoxious  to  the 
"objections  urged  is  comparatively  small, 
"whilst  the  result  would  probably  be  to 
'  'reopen  the  settlement,  and  afford  to  the 
"holders  of  that  portion  of  the  debt  which 
"had  been  declared  fraudulent  and  void 
'  'an  opportunity  to  include  their  claims, 
"and  thus  increase  the  debt  almost  inde- 
"finitely.  To  state  the  argument  more 
"plainly,  without  accuracy  as  to  figures, 
"the  proceeding  would  at  best  diminish 
"the  debt  by  less  than  one  million 
"dollars  on  the  one  hand,  and  would 
"probably  on  the  other  hand  increase  the 
"debt  by  more  than  three  million  dollars. 
"*  *  *  Besides  in  the  cases  at  the  suit  of 
"Morton,  Bliss  &  Co.,  facts  were  alleged 
"against  each  class  of  bonds  of  like  char- 
acter, and  of  equal  force,  to  those  now 
'  'suggested  by  Senator  Dunn.  The  Supreme 
' '  Court  declined  to  allow  inquiry  into  those 
'  'facts,  and  *  *  *  I  have  no  reason  to 
'  'suppose  that  the  objections  now  urged  by 
"Senator  Dunn  would  be  more  favorably 
"considered."  This  statement  by  the 
Attorney-General  covers  the  objections 
raised  in  the  proceedings  by  Morton, 
Bliss  &  Co.  The  mandamus  they  asked 
for  was  ordered  to  issue. 

4.  The  whole  amount  of  bonds  alleged 
to  have  been  improperly  hypothecated  is 
(see  V)  only  $1,848,300.  The  State  had  its 
choice  between  paying  the  money  for 
which  they  were  hypothecated,  and  allow- 
ing the  hypothecated  bonds  to  be  sold  out 
and  funded.  Of  the  two  courses  the  lat- 
ter was  the  lesser  burden  to  the  peo- 
ple. Whatever  the  illegality  of  the 
hypothecation  of  the  bonds,  there  is  no 
shadow  of  doubt  that  the  Legislature 
could  by  subsequent  action  cure  the 
defect,  and  waive  the  non-com- 
pliance with  the  terms  of  the  origi- 
nal Act.  This  principle  is  expounded 
Avith  much  force  and  clearness  in  the  de- 
cision of  the  Supreme  Court  in  the  case  of 
Morton,  Bliss  &  Co.  We  will  assume  that 
the  statute  was  not  complied  with,  and 


that  the  bonds  were  improperly  hypothe- 
cated. It  is  not  denied  that  the  State 
could  authorize  the  issue  of  the 
bonds,  and  could  have  authorized  them  to 
be  hypothecated  for  am  indefinite,  as  for 
a  definite,  length  of  time.  The  question, 
in  the  Morton,  Bliss  &  Co.  case, 
being  whether  certain  bonds  were  invali- 
dated by  not  having  been  sold  for  "the 
"highest  price,"  as  required  bylaw,  the 
Court  said  :  "It  appears,  therefore,  that 
"the  Legislature  possessed  authority  in 
'  'the  first  instance  to  authorize  the  mode  of 
'disposition  claimed  by  the  respondent 
("the  State)  to  have  been  employed  in  the 
"case  of  the  bonds  in  suit.  Thus  we 
"have  all  the  elements  requisite  to  the  ap- 
plication of  the  ordinary  rule  of  waiver, 
"so  familiar  that  it  need  not  be  stated  at 
"large,  nor  fortified  by  authorities.  The 
"Legislature  had  undoubted  authority  to 
"waive  want  of  conformity  as  to  a  matter 
"purely  within  its  own  discretion.  "x"  * 
"This  is  the  idea  of  justice  that  the  State, 
"under  the  form  of  law,  imposes  upon 
"citizens,  as  the  test  of  rectitude  in 
"their  mutual  dealings,  and  it  can  claim 
"for  itself  the  benefit  of  no  other  code  of 
"morals,  or  rules  of  fair  dealing,  than 
"such  as  it  makes  a  part  of  its  legal  and 
"judicial  system."  In  like  manner  the 
State,  by  the  Validating  and  Consolida- 
tion Acts,  waived  the  non-compliance,  if 
any,  with  the  terms  of  the  Acts,  limiting 
the  period  of  time  in  which  money  might 
be  borrowed. 

5.  The  Orr  bonds  (see  V)  said  to  have 
been  hypothecated,  are  reported  to  have 
come  into  the  possession  of  the  Financial 
Agent  by  purchase,  for  the  Sinking  Fund 
Conversion,  or  in  exchange  for  other 
bonds  of  like  amount.  (See  statements  of 
Kimpton  and  Cardozo,  R.  and  R, , 
1874-75.) 

6.  We  attach  no  importance  to  the 
effort  to  cast  out  the  $200,000  of  Sinking 
Fund  bonds  and  the  $191,800  of  Land 
Scrip  bonds  (see  V)  improperly  hypothe- 


29 


cated.  The  wrongful  act  of  the  Agent 
does  not  affect  the  character  of  the  bonds. 
They  were  ordinary  bonds,  and  nobody 
could  know  that  they  belonged  to  a 
special  fund. 

7.  A  far  more  serious  charge  is  that  re-  jj 
lating  to  the  funding   of  8454.021  of  de- 
tached coupons  which  had  already  been 
paid,  or  which  belonged  to  bonds  which 
had  not  been  issued.    The  facts  are  dis-  I 
puted,  and  the  letter  of  the  Consolidation 
Act  authorized  the  funding  of  the  coupons 
of  the  bonds  and  stocks  recognized  in  the 
Act.    But  it  would  not  profit  the  State  to  jj 
destroy   the  Consolidation  Act  for  the 
sake  of  about  $200,000  of  bonds.  More 
than  this,  the  State  has  already  taken  its 
remedy  as  to  §300,000  of  the  questionable 
coupons.    On  account  of  the  funding  of  I 


these  coupons  the  State  obtained  a  ver- 
dict against  Ex-Treasurer  Parker  for 
$75,000.  The  State  cannot  recover  dam- 
ages from  the  culprit  official,  and,  in  addi- 
tion, repudiate  the  bonds  issued. 

To  recapitulate :  Xow  that  the  Conver- 
sion bonds  are  out  of  the  way,  the  whole 
amount  of  State  bonds  alleged  to  be  in 
any  way  fraudulent  is,  in  round  numbers, 
$2,200,000.  This,  without  interest,  is 
equivalent  to  $1,100,000  of  Consolidation 
bonds.  The  objections  to  the  impugned 
bonds  are,  in  some  aspects,  frivolous. 
Every  one  of  the  objections  has  been 
cured  hy  Act  of  Assembly,  under  the  de- 
cree of  the  Supreme  Court,  or  has  been 
cured  by  the  action  of  a  higher  authori- 
ty, the  one  Court  of  last  resort,  the  peo- 
ple of  the  State. 


RATIFICATION  OF  THE  CONSOLIDATION  ACT  BY  THE  PEOPLE. 


[From  The  News  and  Courier,  January  ii,  1878.] 


The  settlement  of  the  public  debt, 
under  the  Consolidation  Act,  was  un- 
questioned until  the  meeting  of  the  pres- 
ent General  Assembly  in  extra  session 
last  July.  There  was  no  thought  of  dis- 
turbing it,  for  the  people  knew  that,  on 
the  whole,  they  were  benefited  by  the 
settlement,  and  could  hardly  hope  to 
make  better  terms  with  the  public  credi- 
tors. The  acquiescence  of  the  persons 
most  interested,  the  bond-holders,  is 
shown  by  the  rapidity  with  which  bonds 
and  stocks  were  funded.  The  amount  of 
Consolidation  bonds  and  stock  issued, 
year  by  year,  is  as  follows  : 

Year  ending  October  31,  1874 ....  $993,584 
October  31,  1875. .  . .  2,616,670 
October  31,  1876. .  . .  728,502 

Four  months  to  March  31,  1877. .  57,534 

Total  $4,396,290 


It  is  safe  to  say  that  had  the  process  of 
funding  been  continued,  after  the  instal- 
lation of  Governor  Hampton,  the  State 
debt  would  now  be  less  than  $6,000,000, 
and  the  credit  of  South  Carolina 
would  stand  as  high,  in  the  money 
markets  of  the  United  States  and 
of  Europe,  as  it  did  before  the 
accomplishment  of  emancipation  and 
the  advent  of  political  reconstruction.  It 
is  true  that  the  bondholder  was  required 
to  sacrifice  one-half  the  amount  of  the 
principal  of  his  bonds;  but  he  found  his 
compensation,  or  expected  to  do  so,  in 
the  certainty  that  the  freedom  of  the  Con- 
solidation bond  from  stigma,  and  the 
combined  will  and  ability  of  the  people  to 
fulfil  their  obligations,  would  make  the 
new  security,in  the  end,  more  valuable  than 


the  old.  What  reason  there  was  for  such 
confidence  will  now  be  shown. 

In  1874  ex-Attorney-General  Chamber- 
lain became  a  candidate  for  the  Republi- 
can nomination  for  Governor.  The  oppo- 
sition to  him  culminated  in  the  with- 
drawal of  a  number  of  Republicans  from 
the  State  Convention  by  which  he  was 
nominated.  By  those  who  so  withdrew, 
the  Independent  Republican  movement 
was  organized,  and  Judge  Green  was 
nominated  for  Governor.  Throughout 
the  canvass  an  effective  argument  used 
by  the  opponents  of  Chamberlain  was 
that  he  and  his  followers  contemplated 
some  reopening  of  the  debt  question, 
which  would  prevent  the  State  from  set- 
tling down,  in  safety,  to  a  debt  of  six  mil- 
lions, under  the  Consolidation  Act.  The 
Republican  platform  had  in  it  a  Consoli- 
dation plank.  It  reads  : 
•  4 'We  especially  pledge  ourselves  to  maintain 
the  settlement  of  the  public  debt  as  made  last 
winter.'1'' 

The  Independent  Republican  Conven- 
tion adopted  the  platform  of  the  Regular 
Republicans,  and  the  Conservative  or 
Democratic  Convention,  which  met  in 
Columbia  in  October  1874,  determined  to 
make  no  nominations,  for  State  officers, 
and  advised  the  people  to  vote  for  the 
Independent  Republican  candidates. 
Throughout  the  canvass  not  a  word  was 
said,  by  the  Democrats,  against  the  Con- 
solidation Act.  The  only  fear  seemed  to 
be  that  so  advantageous  a  settlement  would 
not  be  allowed  to  stand.  Senator  Dunn, 
a  leading  Independent,  alluded,  on  the 
stump,  to  the  supposed  illegal  character 
of  particular  bonds  which  were  funded  or 
to  be  funded  under  the  Act,  but  this  was 


3 


not  a  new  tale  and  it  attracted  little  at- 
tention. When  the  canvass  closed,  and 
Mr.  Chamberlain  was  installed,  the  new 
administration,  to  the  relief  of  the  peo- 
ple, seemed  bent  on  finishing  up  the  ad- 
justment of  the  debt  "as  made  last  winter." 
The  efforts  to  cast  a  doubt  upon  some  of 
the  fundable  bonds,  or  Consolidation 
debt,  met  with  no  especial  favor.  Confi- 
dence, for  once,  was  a  plant  of  quick 
growth. 

Time  rolled  on  and  Wade  Hampton 
was  nominated  for  Governor.  It  was 
not  thought  necessary,  if  any  thought  was 
given  the  matter,  to  make  any  special 
mention  of  the  debt  settlement  in  the  Dem- 
ocratic platform.  In  this  State  the  Dem- 
ocratic party  has  always  been  the  party 
of  honesty.  Yet  there  were  linger- 
ing doubts,  as  to  the  attitude  of  the  party 
towards  the  Consolidation  Act.  These 
doubts  found  expression  in,  and  out  of, 
the  State,  and  the  State  Executive  Com- 
mittee of  the  Democratic  party,  as  in 
duty  and  honor  bound,  promptly  placed 
the  Democracy  squarely  on  the  record. 
The  following  official  declaration  was 
published : 

Rooms  of  the  State  Dem.  Ex.  Com.,  ) 
Columbia,  S.  C,  Oct.  4,  1876.  f 
In  answer  to  inquiries  on  the  State 
debt  and  Education,  we  reply  that,  on  the 
points  made,  the  question  had  already  been 
anstoered  by  the  Democratic  vote  in  the  Legisla- 
ture, but  to  remove  all  doubt,  be  it 

1.  Resolved,  That  the  Democratic  party  will 
give  its  support  to  the  adoption  of  the  pro- 
posed amendment  to  the  Constitution,  (levy- 
ing a  minimum  annual  tax  of  two  mills  for 
the  support  of  the  public  schools.) 

2.  Resolved,  That  the  State  debt,  having 
been  practically  adjusted  by  the  Consolida- 
tion Act  of  December  22,  1873,  and  most  of 
the  creditors  having  come  in,  under  that  Act, 
we  consider  the  adjustment  final,  and  pledge 

THE  PARTY  TO  ABIDE  BY  IT. 

The  State  Democratic  Committee  was 
chosen  by  the  State  Convention.  It  is 
composed  of  gentlemen  of  high  ability 
and  exalted  character.    So  satisfied  were 


the  members  of  the  feeling  and  temper  of 
the  Democratic  party,  the  property-hold- 
ers and  taxpayers  of  South  Carolina,  that 
they  had  not  thought  it  possible  that 
there  could  be  any  suspicion  that  the 
Consolidation  Act  would  be  tampered 
with,  if  the  Hampton  ticket  were  elected. 
To  remove  all  doubt,  however,  they  de- 
clared the  adjustment  under  the  Act  of 
December  22,  1873,  to  be  final,  and 
pledged  the  party  to  abide  by  it.  Their 
action  bound,  and  binds,  every  one  of  the 
ninety  thousand  Democrats  who,  on  that 
glorious  November  day,  the  day  of  our 
deliverance,  cast  their  votes  for  Hampton, 
It  is  now  too  late  to  say  that  the  State 
Committee  exceeded  their  authority. 
Not  a  voice  was  raised'  in  protest.  The 
resolutions  of  the  Committee  were  accept- 
ed and  applauded  in  every  part  of  the 
State.  A  more  solemn  pledge  remained 
to  be  given,  a  pledge  that  is  conclusive,  if 
there  is,  in  political  parties  and  public 
officers,  any  regard  for  plighted  word,  for 
private  interest  and  the  public  good. 

The  members  of  the  House  of  Represen- 
tatives met  in  Columbia,  on  November  28, 
1876.  Upon  the  refusal  of  the  officer  com- 
manding the  United  States  troops  to  admit 
them  to  their  Hall  in  the  State-House,  the 
Democratic  members,  with  some  Repub- 
licans, withdrew  to  the  Carolina  Hall, 
where  they  organized  the  body  known  to 
history  as  the  Wallace  House,  the  body 
afterwards  declared  by  the  Supreme  Court 
to  be  the  legally  constituted  House  of 
Representatives  of  South  Carolina.  The 
Senate  held  aloof.  It  became  necessary  to 
provide  money  for  the  support  of  the 
Hampton  Government,  and  on  December 
20  Mr.  Sheppard  (now  Speaker  of  the 
House  of  Representatives)  introduced  a 
series  of  resolutions  authorizing,  and  pro- 
viding for,  the  collection  of  a  voluntary 
tax.    The  eighth  resolution  is  as  follows  : 

"8.  That  in  order  to  a  correct  understand- 
ing of  our  objects  and  purposes  by  all  the 
people,  it  is  proper  that  we  should,  and  we 
hereby  do,  reiterate  in  good,  faith  our  pledge 


3 


2 


to  redeem  at  the  earliest  practicable  moment  the 
credit  of  the  State,  by  the  payment  of  the  ma- 
tured interest  on  the  valid,  legal  and  recog- 
nized bonded  indebtedness  of  the  State,  as 
now  provided  FOR  by  law;  but  it  is  submit- 
ted that,  until  the  several  departments  of  the 
Government  shall  have  resumed  the  discharge 
of  their  respective  ordinary  constitutional 
functions,  it  will  be  in  vain  to  attempt  the  ac- 
complishment of  such  a  laudable  purpose." 

Mr.  Aldrich  moved  to  strike  out  the 
eighth  resolution.  The  motion  was  not  se- 
conded, and  the  resolutions  were  agreed  to 

Language  cannot  be  plainer  than  the 
language  of  the  resolution.  The  action 
of  the  State  Executive  Committee  was 
borne  in  mind.  In  the  anxieties  of  the 
hour,  the  "Wallace  House  did  not  forget 
their  "pledge  to  redeem  *  *  the  credit  of 
'  'the  State. "  Lest  there  should  be  any  mis- 
understanding, the  resolution  declared  the 
way  in  which  the  pledge  should  be  re- 
deemed, i.  e.,  "by  the  payment  of  the  ma- 
"tured  interest  on  the  valid,  legal  and  recog- 
"nized  bonded  indebtedness  of  the  State"  To 
make  assurance  doubly  sure,  they  de- 
clared that  the  indebtedness  on  which  the 
interest  shall  be  paid  is  "the  bonded  in- 
debtedness of  the  State  as  now  provi- 
ded by  law,"  i.e.,  under  the  Consoli- 
dation Act.  The  resolution  of  the  House 
of  Representatives,  like  the  resolution  of 
the  State  Executive  Committee,  makes  no 
distinction  between  the  bonds  and  stock 
already  issued  under  the  Consolidation 
Act,  and  the  bonds  and  stocks  authorized 
to  be  funded  and  not  then  funded  under 
the  Act.  By  the  resolutions  the  State  recog- 
nizes both  the  outstanding  Consolidation 
bonds  and  stock  and  the  other  bonds  and 


stocks,  not  already  funded,  described  in 
the  Act.  The  rejection  of  any  single  bond 
or  certificate  of  stock  of  the  $4,396,290  of 
Consolidation  securities  already  issued,  or 
the  denial  of  the  right  \o  be  funded,  at- 
taching to  the  $2,704,551  of  debt  out- 
standing and  unfunded,  is  a  violation  of 
the  emphatic  promise  of  a  great  political 
party,  and  sets  at  naught  the  solemn 
pledge  of  the  House  of  Representatives  of 
the  State. 

The  members  of  the  Wallace  House 
constitute  a  majority  of  the  present  House 
of  Representatives.  They  who  were  not 
in  the  Wallace  House  are  bound  by  the 
action  of  the  State  Democratic  Commit- 
tee. Nay  !  every  dollar  of  voluntary  tax 
paid  under  the  resolutions  of  December 
20,  1876,  binds  the  General  Assembly  to 
an  observance  of  their  "pledge,"  in  letter 
and  spirit;  for  it  was  on  the  faith  of  the 
resolutions  that  the  tax  was  paid.  To  give 
"a  correct  understanding"  of  their  ob- 
jects and  purposes  "by  all  the  people"  the 
House  of  ■  Representatives  proclaimed 
their  intention  to  redeem  the  public  credit. 
And  it  was  meet  and  right  that  the  indebt- 
edness recognized  by  the  Consolidation 
Act,  standing  on  the  imposing  ability 
and  unsullied  purity  of  the  Taxpayers' 
Convention,  ratified  again  and  again  by 
the  people,  as  taxpayers  and  as  bondhold- 
ers, should,  when  the  fight  was  won  and 
Home  Rule  was  secured,  be  formally  re- 
affirmed by  the  body  which  declared 
Hampton's  election,  and  which  was  to  all 
intents  and  purposes  the  exponent  of  the 
desires,  interests  and  feelings  of  the  peo- 
ple of  the  State. 


CAN  THE  STATE  REPUDIATE!— THE  CONSOLIDATION  ACT  A  CONTRACT 
WITH  HER  CREDITORS  FROM  WHICH  THERE  IS  NO  ESCAPE. 


[From  The  News  and  ( 

The  Consolidation  Act,  as  explained  in 
previous  articles,  authorizes  the  funding 
of  bonds  and  stocks,  to  the  amount  of 
$9,886,627,  in  Consolidation  bonds  or 
stock,  at  the  rate  of  50  per  cent,  of  the 
face  value  of  the  bonds  and  stocks  funded 
and  surrendered.  It  has  been  demon- 
strated that  this  adjustment  of  the  debt 
(coupled  with  the  Republican  repudiation 
of  the  Conversion  bonds)  will  make  the 
whole  public  debt,  when  the  funding  shall 
be  completed,  $5,998,565  as  against  a  debt 
of  $15,851,627  on  October  31,  1873.  Also 
that  this  adjustment  makes  the  debt 
$2,641,566  less  than  it  would  be  if  the 
Ante-Reconstruction  debt,  funded  and  un- 
funded, were  paid  at  its  full  value,  and 
the  Post-Reconstruction  or  Republican 
debt  were  repudiated.  Also  that  this  ad- 
justment, under  the  Consolidation  Act, 
makes  the  debt  $3,247,357  less  than  it 
would  be  if  the  Ante-Reconstruction  debt 
were  paid  in  full,  and  the  Post-Reconstruc- 
tion bonds  were  recognized  to  the  extent  of 
the  money  actually  received  for  them,  by  or 
for  account  of  the  State.  Also  that  by  com- 
mon consent  of  the  people  from  1874  to 
1877,  by  the  action  of  the  Democratic 
members  of  the  Legislature,  by  the  pledge 
of  the  State  Democratic  Executive  Com- 
mittee in  1876  and  the  f ormal  resolution  of 
the  present  House  of  Representatives  in 
December,  1876,  the  Democratic  party, 
the  State,  is  bound  in  honor  to  maintain 
inviolate  the  settlement  in  process  of  com- 
pletion under  the  Consolidation  Act.  It 
remains  to  consider  how  far  the  State  can, 
if  it  so  desire,  repudiate  or  set  aside  the 
Consolidation  Act,  and  the  bonds  and 


Courier,  January  12,  1S7S.] 

stock  issued  in  conformity  with  its  pro- 
visions. 

Two  classes  of  bonds  and  stocks  are 
within  the  scope  of  the  Consolidation  Act. 
1.  Bonds  and  stocks  to  the  amount  of 
$2,704,551,  authorized  by  the  Act  to  be 
funded,  and  not  yet  funded.  2.  Consoli- 
dation bonds  and  stock,  to  the  amount  of 
$4,396,290,  already  issued  under  the  Act. 
These  two  classes  of  indebtedness  will  be 
considered  separately. 

The  fundable  bonds  and  stocks  are  en- 
titled to  be  funded  on  presentation.  There 
is  no  warrant  for  the  suspension  of  the 
funding.  By  the  terms  of  the  Consolida- 
tion Act,  the  neglect  or  refusal  of  any 
State  officer  to  perform  any  duty  devolved 
upon  him  by  the  Act  subjects  him  to  in- 
dictment for  felony,  and,  by  the  Act,  the 
Treasurer  is  "required"  to  receive  the 
fundable  bonds  and  stocks  and  issue  in 
exchange  Consolidation  bonds  or  stocks. 
The  Act  provides  that  no  tax  shall  "ever 
"be  levied  to  pay  the  interest  or  principal" 
on  any  of  the  fundable  bonds  or  stocks,  so 
long  as  they  remain  outstanding  in  their 
present  form.  This  was  done  to  induce 
the  holders  to  promptly  exchange  their 
securities.  The  stringent  provisions  in 
I  relation  to  the  refusal  of  any  officer  to 
perform  his  duty  under  the  Act  gave  as- 
surance to  the  holders  of  the  fundable 
debt  that  they  would  get  Consolidation 
bonds  or  stock,  whenever  they  were 
ready  to  exchange  or  fund.  It  is  evident 
that  it  would  be  a  violation  of  the  com- 
pact to  refuse  to  issue  Consolidation  bonds 
or  stock  in  exchange  for  any  of  the  out- 
standing fundable  debt.     Moreover,  the 


34 


State  cannot  relieve  itself  from  one  part 
of  the  bargain  without  absolving  its  credi- 
tors from  their  obligations  under  the  Act. 
The  Consolidation  Act  was  essentially  a 
compromise,  and  the  State  cannot, 
with  good  grace,  insist  that  holders  of 
one  set  of  bonds  and  stocks  shall  rest  con- 
tent with  fifty  cents  on  the  dollar,  when 
the  State  gives  nothing  whatever  to  the 
holders  of  another  set  of  bonds  and  stocks 
equally  entitled  to  be  funded  at  one-half 
of  their  face  value.  The  Act  is  in  the  na- 
ture of  a  compromise  with  a  body  of 
creditors.  Most  of  them  have  accepted 
the  terms  offered.  Can  the  State  hold 
the  consenting  creditors  to  the  terms  of 
the  compromise,  if  it  deny  the  creditors 
who  have  not  yet  come  in  every  benefit 
the  compromise  was  expected  to  secure  to 
them,  and  to  which,  without  limitation  of 
time,  they  were  entitled  on  and  after  the 
passage  of  the  Act?  Such  a  course  would 
be  inconsistent,  to  say  the  least,  with  the 
declarations  and  resolutions  by  which  the 
people  Je  held  to  an  exact  compliance 
with  '  e  terms  of  the  settlement  under 
the  _ct. 

The  holders  of  the  Consolidation  bonds 
and  stocks  occupy  a  different  position.  It 
is  provided  by  the  Act  that  the  Consoli- 
dation bonds  and  stock  shall  {'bear  upon 
1 'their  face  the  declaration  that  the  pay- 
ment of  the  interest  and  the  redemption 
'  'of  thu  principal  is  secured  by  the  levy  of 
"an  annual  tax  of  two  (2)  mills  upon  the 
"dollar  upon  the  entire  taxable  property 
"of  the  State,  which  declaration  shall  be  con- 
"sidered  a  contract  entered  into  between  the 
"Slate  and  every  Jwlder  of  said  bonds  and 
"stocks."  Also  that  " all  coupons  upon  the 
"(Consolidation)  bonds  and  the  interest 
"orders  of  said  certificates  of  (Consolida- 
"tion)  stock,  herein  authorized  to  be 
"issued  shall  be  received  in  payment  of  all 
"taxes  due  the  State  during  tlie  year  in 
"which  they  mature,  except  for  tax  levied  for 
"the  public  schools ."  Also  that  "the  faith, 
'  'credit  and  funds  of  the  State  are  hereby 


"solemnly  pledged  for  the  punctual  pay- 
"ment  of  the  interest  and  the  final  re- 
demption of  the  principal  of  said  (Con- 
solidation) bonds  and  stocks,and  for  pro- 
viding a  surplus  fund  for  that  pur- 
"pose." 

The  Consolidation  bonds  (omitting  num- 
bers, amounts  and  signatures,)  read  as 
follows  : 

"The  State  of  South  Carolina  promises  to 

pay  to  the  bearer  the  sum  of   dollars  on 

the  1st  day  of  July,  1893,  with  interest  at 
the  rate  of  six  per  cent,  per  annum,  payable 
semi-annually,  on  the  first  days  of  January 
and  July  in  each  year,  in  the  cities  of  New 
York  and  Columbia,  South  Carolina,  on  the 
presentation  of  the  proper  coupons  hereto  an- 
nexed, bearing  the  signature  of  the  State 
Treasurer,  said  coupons  being  received  in  pay- 
ment of  all  taxes  due  the  State  during  the  year  in 
which  they  mature,  except  for  tax  levied  for  the 
public  schools. 

"The  payment  of  the  interest  and  the  re- 
demption of  the  principal  of  this  bond  is  se- 
cured by  the  levy  of  an  annual  tax  of  two 
mills  upon  the  entire  taxable  property  of  the 
State.  The  faith,  credit  and  funds  of  the 
State  are  hereby  solemnly  pledged  for  the 
punctual  payment  of  the  interest  and  redemp- 
tion of  the  principal  of  this  bond  by  Act  of 
the  General  Assembly,  approved  December 
22,  1873." 

The  coupons  of  the  Consolidation 
bonds  bear  the  following  endorsement : 

Receivable  in  payment  of  all  taxes,  except 
school  tax. 

As,  in  respect  of  the  annual  tax  and  the 
receivability  for  taxes,  the  interest  orders 
of  the  Consolidation  stock  and  the 
coupons  of  the  Consolidation  bonds 
occupy  precisely  the  same  position, 
it  will  be  sufficient,  in  this  discussion,  to 
deal  exclusively  with  the  Consolidation 
bonds  and  coupons.  Whatever  conclu- 
sions are  reached,  apply  equally  to  bonds 
and  stock,  to  coupons  and  interest  orders. 

Every  holder  of  a  Consolidation  bond 
or  coupon  is  advised,  by  the  terms  of  the 
bond  or  coupon,  of  the  character  and  ex- 
tent of  his  rights  and  remedies.    The  de- 


35 


liberate  purpose,  in  framing  the  Consoli- 
dation Act,  was  to  give  the  bondholder 
the  power  to  enforce  the  payment  of  the 
principal  and  interest  of  his  bond.  This 
was  known  by  the  State,  and  is  fully 
understood  by  the  bondholder.  It  is 
morally  certain,  therefore,  that,  if  the 
State  refuse  to  pay  interest  on  any  Con- 
solidation bond,  or  continue  to  refuse  to 
receive  the  coupons  for  State  taxes,  the 
bondholders  will  take  proceedings  to  en- 
force their  rights. 

The  first  remedy  open  to  the  bondhold- 
ers is  in  connection  with  the  provision  for 
the  levy  of  an  annual  tax  for  the  payment 
of  the  interest  and  principal  of  the  bonds. 
It  was  decided  by  the  Supreme  Court  of 
this  State,  in  the  case  of  Morton,  Bliss  & 
Co.,  vs.  Comptroller  General,  April  term, 
1873,  (long  before  the  passage  of  the  Con- 
solidation Act)  that  where  provision  is 
made  for  the  levy  of  an  annual  tax,  as  in 
the  Consolidation  Act,  the  inhibition  of 
the  Constitution  of  the  United  States  that 
"no  State  shall  pass  any  law  impairing  the 
"obligation  of  contracts,''  prevents  the 
Legislature  of  the  State  from  depriving 
the  public  creditor  of  his  remedy  to  en- 
force the  collection  of  the  tax  under  the 
law  of  force  at  the  passage  of  the  Act. 
The  Court  further  decided  that  such  a 
provision  for  an  annual  tax  both  levies  the 
tax  and  appropriates  it  to  the  payment  of 
interest,  and  that  no  further  legislation  is 
necessary.  The  Supreme  Court  in  1873 
consisted  of  Chief  Justice  Moses,  and  As- 
sociate Justices  Willard  (now  Chief  Jus- 
tice) and  Wright.  Whatever  the  degree 
of  respect  in  which  the  Supreme  Court,  as 
constituted  in  1873,  is  held,  the  decisions 
of  the  Court  are  law,  in  this  State,  until 
reversed.  It  is  most  likely,  however,  that 
the  holders  of  Consolidation  bonds  would 
direct  their  efforts  to  enforcing  the  receiv- 
ability  of  the  coupons  for  taxes,  rather 
than  to  an  enforcement  of  the  levy,  col- 
lection and  disbursement  of  an  annual 
tax. 

5 


The  coupons  of  the  Consolidation  bonds 
are  by  the  Act  receivable  "in  payment  of 
"all  taxes  due  the  State  in  the  year  in 
"which  they  mature,  except  for  tax  levied 
"for  the  public  schools."  They  were  so 
received  up  to  the  time  of  the  election  of 
Governor  Hampton.  When  the  House  of 
Representatives  (December  20,  1876)  au- 
thorized the  collection  of  a  voluntary  tax, 
and  reiterated  the  "pledge"  to  redeem  the 
credit  of  the  State  by  the  payment  of  the 
interest  on  the  bonded  debt  "as  now 
'  'provided  for  by  law, "  they  submitted  that 
it  was  "in  vain  to  attempt  the  accomplish- 
"ment  of  such  a  laudable  purpose"  until 
the  several  departments  of  the  govern- 
ment had  resumed  the  discharge  of  their 
functions  ;  and  (in  the  ninth  resolution) 
they  "earnestly  request  that,  in  order  to 
"the  purposes  hereinabove  set  forth,  all 
"persons  shall  tender  in  payment  of  the 
"sums  required  only  gold  and  silver  coin, 
"United  States  currency  an  "National 
"Bank  notes."  The  people  took  1  c  House 
of  Representatives  at  their  worn,  ,  nd  in 
not  more  than  one  or  two  cases,  if  any, 
were  coupons  tendered  in  payment  of  the 
Hampton  tax.  The  regular  Supply  and 
Appropriation  Act  was  approved  June  9, 
1877,  and  provides  "that  all  taxes  assessed 
"and  payable  under  this  Act  shall  be  paid 
"in  the  following  kind  of  funds  and  no 
"other  :  Gold  and  silver  coin,  United 
"States  currency  and  National  Bank 
"notes."  This  excludes  the  Consolidation 
coupons.  The  issue  is  squarely  made  up. 
It  is  fortunate,  therefore,  that  there  is  a 
decision  of  an  appellate  tribunal  of  the 
highest  order  of  respectability,  in  a  pre- 
cisely analagous  case,  which  will  serve  as 
a  guide  and  warning.  This  is,  the  deci- 
sion of  the  Court  of  Appeals  of  the  State 
of  Virginia,  in  the  cases  of  Antoni  vs. 
Wright,  Sheriff,  and  Wright,  Sheriff,  vs. 
Smith,  November  Term,  1872.  They  in- 
volve the  same  question. 

The  Act  of  Assembly  of  Virginia,  ap. 
proved  March  30,  1871,  entitled  "An  Act 


36 


"to  provide  for  the  funding  and  payment 
"of  the  public  debt,"  provides  that  "the 
"coupons  attached  to  the  bonds  to  be 
"issued  under  that  Act,  shall  be  payable 
"semi-annually  and  be  receivable,  at  and 
"after  maturity,  for  all  taxes,  debts,  dues  and 
"demands  due  the  State,  ivhich  shall  be  ex- 
" pressed  on  their  face."  As  will  be  seen  by 
reference  to  the  wording  of  the  Consolida- 
tion bonds  and  coupons,  the  only  material 
difference  between  the  Virginia  Act  and 
the  Consolidation  Act  is,  that  in  Virginia 
the  coupons  are  receivable,  after  maturity, 
for  all  taxes,  while  the  Consolidation  bonds 
are  only  receivable  for  the  taxes  of  the 
year  in  which  they  mature.  The  Virginia 
Act  of  March  7,  1872,  prohibited  the  re- 
ceipt, in  payment  of  taxes,  of  "anything 
"else  than  gold  or  silver  coin,  United 
"States  Treasury  notes,  or  notes  of  the 
"National  Banks  of  the  United  States." 
This  agrees  with  the  South  Carolina  Sup- 
ply Act  of  June  9, 1877.  Andrew  Antoni, 
a  citizen  of  Richmond,  applied  to  the  Court 
of  Appeals  for  a  writ  of  mandamus  to  com- 
pel John  Wright,  Sheriff,  to  receive  in 
payment  of  taxes  a  due  coupon  of  one  of 
the  bonds  issued  under  the  Virginia  Fund- 
ing Act  of  March  30,  1871.  A.  A.  Smith 
made  a  similar  application  to  the  Circuit 
Court  of  Richmond.  The  Sheriff  set  up 
several  objections  to  the  issue  of  the  man- 
damus. Smith  demurred.  The  Circuit 
Court  directed  that  a  peremptory 
mandamus  issue  commanding  the 
{Sheriff  to  receive  the  coupon.  Wright 
appealed.  The  cases  were  argued 
by  the  Attorney-General  for  the  Sheriff, 
and  by  Ould  and  Carrington,  and  B.  T. 
Johnson  &  Roy  all  for  the  petitioners  and 
appellee.  The  Court  of  Appeals  decided 
that  the  Funding  Act  of  March  30,  1871, 
constitutes  a  contract  on  the  part  of  the  State 
which  cannot  be  repealed  by  the  General  As- 
sembly, and  the  contract  follows  the  coupons  in 
the  hands  of  the  holders  thereof ,  though  pur- 
chased after  the  repeal  of  the  Funding 
Act;  and  that  the  Act  of  March  7,  1872, 


which  directs  what  shall  be  received  in 
payment  of  taxes,  dues,  &c,  to  the  State, 
so  far  as  it  respects  the  provisions  of  the 
Funding  Act,  in  relation  to  the  coupons 
of  bonds  issued  under  the  Funding  Act, 
is  repugnant  to  the  provision  of  the  Consti- 
tution of  the  United  States,  which  forbids  a 
State  to  pass  any  laio  impairing  the  obligation 
of  contracts.  The  opinion  of  the  Court 
was  delivered  by  Judge  Bouldin,  whose 
arguments  and  authorities  are  conclusive ; 
there  is  no  flaw  in  the  chain  of  reason- 
ing, no  break  in  the  long  line  of  prece- 
dent. 

Judge  Bouldin  first  inquires  whether 
the  undertaking  to  receive  the  coupons 
for  taxes,  &c,  is  a  valid  legislative  con- 
tract, upon  sufficient  consideration.  The 
decision  is  that  "the  consideration,  on  the 
"part  of  the  creditors,  is,  in  fact,  com- 
plied with  by  the  surrender  of  their 
"bonds  to  the  State  to  be  cancelled;  and 
"the  State  issues  to  them  bonds,  *  *  * 
"as  agreed  on,  with  the  privilege  afore- 
said of  receivability  for  taxes,  &c, 
"secured  on  the  face  of  the  coupons." 
Is  this  a  contract  ?  In  the  language  of 
Chief  Justice  Marshall,  the  Court  say: 
"This  is  certainly  a  contract  clothed  in 
"forms  of  unusual  solemnity. "  The  de- 
cision of  the  Supreme  Court  of  the  United 
States  in  the  case  of  Woodruff  vs.  Trapnall 
(involving  the  receivability  of  bills  of 
a  State  Bank  for  taxes)  is  cited,  and  the 
Virginia  Court  say:  "Much  more  clearly 
"then  is  this  (Coupon  case)  a 'case  of  con- 
"  'tract  ichich  could  not  be  impaired  by 
"  'legislation,'  since  here  the  State,  not 
"indirectly  through  her  interest  in  the 
"Bank,  but  directly  and  immediately,  is 
"both  creditor  and  debtor,  and  as  such 
"enters  into  the  agreement  with  her  credi- 
tors set  forth  on  the  face  of  the  coupons  that 
"they  shall  be  receivable  in  payment  of 
"all  taxes,  debts  and  demands  due  the 
"State — that  a  debt  of  hers,  past  due,  shall  bs 
"received  inpayment  of  a  debt  due  to  her." 
The  Court  held  that  by  special  legislation, 


37 


amounting  to  a  contract,  a  subsequent  leg- 
islature may  be  bound,  as  in  the  case  of  the 
exemption  of  property  from  taxation,  and 
in  charters  of  incorporation,  where  the 
right  of  amendment  or  repeal  is  not  reserv- 
ed. An  additional  sanction  to  the  present 
obligation  is  that  receiving  the  coupons  in 
payment  of  bills  due  the  State  is  applying 
the  familiar  law  of  set-off,  which  is  good 
against  the  State  as  between  individuals. 
Moreover  the  State  had  in  1847  provided 
that  certain  claims  should  be  received  for 
taxes,  and  in  1856  treasury  notes,  receiva- 
ble, "by  way  of  set-off,''  for  all  taxes, 
were  issued.  The  Act  of  April  25,  18G7, 
made  certificates  for  interest  on  the  pub- 
lic debt  receivable  for  taxes.  (South  Car- 
olina did  a  similar  thing  in  the  case  of  the 
bills  of  the  Bank  of  the  State,  and  of  the 
Bills  Receivable  issued  under  the  Act  of 
December,  1865.)  The  Court  justly  say  : 
"Xor  do  we  think  it  a  larger  exercise  of 
'  'power  (to  temporarily  appropriate  in  ad- 
vance a  portion  of  the  public  revenue  to 
"the  payment  of  a  debt  of  the  State,  past 
"due  when  the  appropriation  takes  effect) 
"than  the  surrender  forever  of  the  right  of 
"the  State  to  tax  the  property  and  income 
"of  great  and  wealthy  corporations.  On 
"the  contrary  we  think  the  latter  immea- 
surably greater  than  the  former."'  The 
Court  further  say  that  the  objection  that 
the  Funding  Act  violates  the  constitutional 
provision  that  "no  money  shall  be  paid 
"out  by  the  State  Treasury  except  in  pur- 
suance of  appropriations  made  bylaw," 
(the  South  Carolina  prohibition  is,  that 
'  'no  money  shall  be  drawn  from  the  Treas- 
ury but  in  pursuance  of  appropriations 
"made  by  law'')  has  no  application  to  the 
cases  before  them,  as  by  the  equitable  prin- 
ciple of  set-off  "the  taxes  are  paid  or  ex- 
tinguished by  the  coupons  without  ever 
"going  into  the  State  Treasury,  and  conse- 


11  "quently  no  money  is  actually  paid  out  of 
"the  treasury."     But  if  it  should  be  re- 

|  garded  as  such  payment,  "the  Funding 

|  "Act  would  be  regarded  as  an  Act  of 
'  "Appropriation."'  "We  give,  in  another 
;  place,  some  extracts  from  the  opinion  of 
the  Court.  Judge  Staples  dissented  on 
grounds  which,  even  if  sustained,  (ex- 
cept in  the  allegation  that  the  Legisla- 

{  ture,  in  passing  the  Funding  Act,  exceeded 

j  its  powers)  have  no  bearing  on  the  South 
Carolina  Act,  It  is  the  practice  of  the 
Court  of  Appeals  of  Virginia  to  grant  a  re- 
hearing, if  any  one  of  the  Judges  who 
united  in  the  decision  is  in  doubt  as  to  its 

j  correctness.  Xo  such  Judge  was  found, 
and  the  motion  for  a  rehearing  was  denied 
by  Judge  Anderson,  in  an  opinion  as  thor- 
ough and  as  cogent  as  that  of  Judsre  Boul- 

I  din.  The  coupons  of  the  Funding  bonds 
have,  ever  since,  been  receivable  for  all 
State  taxes  in  Virginia.  Xo  way  has  yet 
j|  been  found  (and  probably  the  will  was 

]  not  wanting)  to  evade  the  decision  of  the 
Court. 

With  the  decision  of  the  Court  of  Ap- 
peals of  Virginia,  based  on  the  decisions 
!  of  the  United  States  Supreme  Court,  con- 
!  fronting  them  at  every  point,  we  do  not 
see  how  the  General  Assembly  of  South 
Carolina  can  hope  to  prevent  the  payment 
of  State  taxes,  from  year  to  }Tear,  in  Con- 
solidation coupons.    The  General  Assem- 
bly can  make  work  for  lawyers,  and 
plunge  the  State  into  a  sea  of  litigation ; 
I  but  the}1"  cannot  deprive  the  holders  of 
j  coupons  of  their  right,  under  a  valid  legis- 
j  lative  contract,    to  have  the  coupons 
received  "  in  payment  of  all  taxes  due  the 
"State  during  tJie  year  in  which  they  mature, 
"except  for  tax  levied  for  public  schools. " 
The  effort  to  violate  the  contract  will  be 
!|  distressingly  costly,  and,  as  an  indication 
;  of  want  of  public  faith,  injurious  in 
I  the  extreme  to  every  citizen  of  the  State. 


AN  INSTRUCTIVE  DECISION. 


CAN  A  STATE  BREAK  A  CONTRACT  WITH  ITS  CREDITORS ?— THE  OB- 
LIGATION TO  RECEIVE  COUPONS  FOR  TAXES,  AS  PROVIDED  BY  LAW, 
CANNOT  BE  IMPAIRED  BY  ANY  SUBSEQUENT  LEGISLATION— A  CO- 
GENT ARGUMENT  LEADING  TO  A  JUST  CONCLUSION— RELIEF  FROM 
PECUNIARY  PRESSURE  TOO  DEARLY  BOUGHT  AT  THE  PRICE  OF 
VIOLATED  FAITH. 


The  following  extracts  are  made  from  the 
decision  of  the  Court  of  Appeals  of  Virginia 
in  the  matter  of  the  receivability  of  the 
coupons  of  State  bonds  for  taxes: 

The  first  and  all  essential  question  is,  was 
there  a  valid  contract  between  the  State  and 
her  bondholders  ? 

■x-  *  *  -x-  -x-  * 

A  large  proportion  of  the  creditors  accepted 
the  terms  proposed,  (in  the  Funding  Act  of 
March  30,  1871,)  received  the  bonds  of  the 
State  for  two-thirds  only  of  their  claims — re- 
ceived certificates  as  aforesaid  for  the  remain- 
ing third — and  surrendered  their  old  bonds  to 
to  be  cancelled;  and  the  question  is,  whether 
the  undertaking  by  the  State  set  forth  in  the 
coupons  issued  under  the  act,  that  they  should 
be  "receivable  at  and  after  maturity  for  all 
taxes,  debts,  dues  and  demands  due  the 
State,"  is  a  valid  legislative  contract  upon 
sufficient  consideration  ?  Were  it  a  contract 
between  individuals,  the  mere  statement  of 
the  case  would  suggest  the  answer.  To  illus- 
trate: A  and  B  owe  to  C  a  joint  debt,  but  in 
unequal  proportions  as  between  themselves.  B 
leaves  the  country,  and  the  pecuniary  condi- 
tion of  A,  and  the  circumstances  of  the  case, 
make  it  reasonable,  in  A's  judgment,  that  he 
should  propose  a  separate  adjustment  of  the 
amount  due  from  him  as  between  himself  and 
B,  and  as  part  of  the  arrangement,  proposes, 
as  agent  and  trustee,  to  collect  for  C,  B's 
proportion  of  the  debt.  C  accepts  the  propo- 
sition, takes  from  A  his  individual  bond  for 
the  principal  and  interest  of  his  part  of  the 
debt,  with  largely  extended  credit;  takes  his 
undertaking  in  writing,  as  agent  and  trustee, 
to  collect,  if  practicable,  and  account  for  B's 
proportion  of  the  debt,  and  surrenders  to  A 
for  cancellation  the  joint  bond  of  A  and  B.  Is 
there  an  intelligent  judicial  tribunal  on  earth 
that  would,  for  a  moment,  tolerate  the  de- 
fence by  A  that  his  bond  was  without  legal 
consideration  ?  We  think  not.  The  surren- 
der alone  by  the  creditor  to  the  debtor  of  a 
bond  or  note  to  be  cancelled,  constitutes,  of 
itself,  ample  legal  consideration  for  its  re- 
newal, with  all  arrearages  of  interest  added, 
and  is  a  daily  transaction  between  individuals. 
A  fortiori,  is  there  ample  legal  consideration, 
when  other  considerations,  involving  princi- 


ples of  compromise,  enter  into  the  adjust- 
ment; when  one-third  of  the  principal  and  in- 
terest is  temporarily  or  permanently  abated, 
and  when  the  new  bond  is  taken  for  only  two- 
thirds  of  the  debt  ? 

Such  would  certainly  be  the  case  on  such  a 
contract  between  individuals;  and  what  is  a 
valid  consideration  between  individuals  is 
alike  valid  between  the  State  and  individuals. 
We  have  never  had  in  such  matters  one  code 
of  law  and  morals  for  the  State,  and  another 
for  individuals;  the  same  laws  govern  both. 

THE  ADJUSTMENT  IS  A  CONTRACT. 

Authority  on  the  question  whether  the  ad- 
justment we  are  considering  is  a  contract — 
and  a  contract  on  sufficient  consideration, 
would  seem  to  be  scarcely  necessary;  but  the 
case  of  State  of  New  Jersey  v.  Wilson,  7 
Cranch's  R.  154,  involving  in  substance  the 
same  question,  is  directly  in  point. 

*  -x-  *  *  *  * 

Now,  it  will  be  seen  on  examination,  that 
all  the  requisites  of  a  contract  referred  to  by 
Chief  Justice  Marshall  in  the  case  of  State  of 
New  Jersey  v.  Wilson,  exist  in  the  cases  un- 
der consideration.  The  subject  matter  was 
an  equitable  adjustment  of  the  State  debt 
under  the  novel  and  anomalous  condition  in 
which  the  State  of  Virginia  was  placed;  so 
that  complications  with  West  Virginia  might 
be  avoided,  and  the  amount  for  which  Vir- 
ginia was  willing  to  be  held  directly  bound 
to  her  creditors  might  be  distinctly  ascer- 
tained, and  her  bonds  given  for  that  amount, 
in  lieu  of  the  old  bonds;  "a  proposition  to  this 
effect  is  made— the  terms  stipulated— the  con- 
sideration agreed  upon;  which  is"  the  issue 
by  the  State  of  the  bonds  and  certificates 
aforesaid,  with  the  extepded  credit  thereby 
secured  to  the  State,  and  the  further  consid- 
eration of  the  surrender  by  the  creditors  of 
their  old  bonds  to  be  cancelled.  The  consid- 
eration on  the  part  of  the  creditors  is,  in  fact, 
complied  with  by  the  surrender  of  their  bonds 
to  the  State  to  be  cancelled;  and  the  State 
issues  to  them  bonds  and  certificates  as  agreed 
on,  with  the  privilege  aforesaid  of  receiva- 
bility for  taxes,  &c,  secured  on  the  face  of 
the  coupons.  Is  this  is  a  contract?  In 
the  language  of  Chief  Justice  Marshall 
in     the     case     just     referred     to,  we 


39 


say,  "This  is  certainly  a  contract 
clothed  in  forms  of  unusual  solemnity;" 
and  like  the  privilege  of  exemption  from 
taxation  in  that  case,  the  quality  of  receiva- 
bility  in  payment  of  taxes  and  other  dues  to  the 
State,  in  these  cases,  is  annexed  not  to  the 
persons  of  the  holders,  but  to  the  coupons 
themselves,  and  follows  them  wherever  they 
may  go. 

OTHER    DECISION'S    OF    THE    UNITED  STATES 
SUPREME  COURT. 

The  United  States  Supreme  Court  held  (in 
the  Ark.  Bank  case)  that  the  legislation  afore- 
said making  the  notes  of  the  bank  receivable 
in  payment  of  debts  to  the  State  constituted  a 
contract  between  the  State  and  the  holders  of 
the  notes,  which  was  binding  on  the  State. 
Woodruff  vs.  Trapnall,  10  How.  U.  S.  R.  190. 
Judge  McLean,  delivering  the  opinion  of  the 
court,  said,  "The  entire  stock  of  the  bank  is 
owned  by  the  State.  It  furnished  the  capital 
and  receives  the  profits.  And  in  addition  to 
the  credit  given  to  the  notes  of  the  bank  hy 
the  capital'  provided,  the  State  declares  in 
the  charter  they  shall  be  received  in  all  pay- 
ments of  debts  due  to  it.  Is  this  a  contract  ? 
A  contract  is  defined  to  be  an  agreement  be- 
tween competent  parties  to  do,  or  not  to  do, 
a  certain  thing.  The  undertaking  on  the  part 
of  the  State  is  to  receive  the  notes  of  the 
bank  in  payments  from  its  creditors. 

"This  conies  within  the  definition  of  a  con- 
tract. It  is  a  contract  founded  on  good  and 
valuable  consideration — a  consideration  bene- 
ficial to  the  State,  as  its  profits  are  increased 
by  sustaining  the  credit  and  consequently 
extending  the  circulation  of  the  paper  of  the 
bank. 

"With  whom  was  this  contract  made  0  We 
answer  with  the  holders  of  the  paper  of  the 
bank.  The  notes  are  made  payable  to  bearer; 
consequently  every  bona  fide  holder  has  a 
right,  under  the  28th  section,  to  pay  to  the 
State  any  debt  he  may  owe  it  in  the  paper  of 
the  bank.  It  is  a  continuing  guaranty  by  the 
State  that  the  notes  shall  be  so  received. 
Such  a  contract  would  be  binding  on  an  in- 
dividual, and  it  is  not  the  less  so  on  the 
State."  Ibid,  p.  205-6.  "The  guaranty  in- 
cluded all  the  notes  of  the  bank  in  circular 
tion  as  clearly  as  if  on  the  face  of  every  note 
the  words  had  been  engraved,  'This  note 
shall  be  received  b}~  the  State  in  payment  of 
debts.'  And  that  the  Legislature  could  not 
withdraw  this  obligation  from  the  notes  in 
circulation  at  the  time  the  guaranty  was  re- 
pealed, is  a  position  which  can  require  no 
argument.  Any  one  had  the  right  to  receive 
them  and  to  test  the  constitutionality  of  the 
repeal."    Ibid,  p.  206. 

All  this  reasoning  applies  with  full  force  to 
the  contract  under  consideration.  Indeed, 
the  contract  in  the  cases  before  us  stands  on 
higher  ground  than  that  in  the  case  of  Wood- 
druff  vs.  Trapnall,  in  this:  that  here  the 
State  is  herself  both  creditor  and  debtor, 
directly  and  immediately.  It  is  her  own 
debt,  and  not  the  debt  of  an  insolvent  corpo- 


|'  ration     which     she    has     contracted  to 
receive.     And      it      stands      on  higher 
ground   in      this     also— that     here  the 
receivability  of  the  coupons  in  payment  to 
the  State  is  engraved  on  the  face  of  each 
I  coupon,  whereby- the  State  makes  known  to 
every  one  who  may  desire  to  acquire  them 
that  they  will  be  received  in  all  payments  to 
j   the  State,  and  thus  invites  him  to  take  them; 
whereas,  in  the  case  of  Woodruff  vs.  Trapnall,' 
although  the  same  right  was  secured  by  law, 
yet  it  did  not  appear  "on  the  face  of  the  notes. 
And  furthermore,  the  consideration  in  this 
j  j  case  is  more  valuable  and  beneficial  to  the 
j|  State  than  that  in  Woodruff  vs.  Trapnall,  be- 
cause here  the  State  secures  a  temporary  or 
:   permanent  abatement  of  one-third  of  her  debt, 
j|  and  a  credit  of  thirty-four  years  on  the  resi- 
due.   If  then  the  contract  in  Woodruff  vs. 
Trapnall  be  a  contract  on  good  and  sufficient 
consideration,  and  binding  on  the  State,  a 
j   multo  jortiori  would  the  contract  here  appear 
:[  to  be  on  good  and  sufficient  consideration, 
and  binding  on  the  State. 

It  is  true  that  four  of  the  judges  dissented 
in  the  case  of  Woodruff  vs.  Trapnall;  but  the 

i  same  question  identically  arose  in  the  recent 
|  case  of  Furman  vs.  Xichol,  8  Wall.  U.  S.  R. 

I  44;  and  the  decision  in  Woodruff  vs.  Trapnall 
was  reaffirmed  by  the  Supreme  Court  without 

I I  a  dissenting  voice. 

These  decisions,  made  directly  on  the  point, 
upon  elaborate  argument  by  "the  Supreme 
ji  Court  of  the  United  States— a  tribunal  which 

ii  assumes  to  act,  and  has  been  generally  re- 
||  garded,  as  the  appellate  tribunal  in  the  last 
j ;  resort  in  such  cases— would  seem  to  be  con- 
clusive of  the  question. 

BINDING  SUBSEQUENT  LEGISLATURES. 

But  it  is  earnestly  argued  that  it  is  not 
within  the  legitimate  power  of  the  Les;isla- 
I  ture  to  make  such  a  contract;  that  it  would 
tend  to  trammel  and  embarrass  the  action  of 
|!  subsequent  Legislatures— to  deprive  them  of 
j!  proper  control  of  the  annual  revenue— and 
! j  might,  by  absorbing  the  revenue,  substantially 
j  i  annul  the  taxing  power,  and  put  a  stop  to  the 
;|  wheels  of  government. 

It  is  unquestionably  true,  that  one  Legisla- 
ture cannot,  by  an  act  of  ordinary  legislation, 
jj  bind  or  control,  in  any  manner,  subsequent 
I  Legislatures.  Such  acts  of  legislation  are, 
||  and  of  right  should  be,  always  subject  to 
I   amendment  or  repeal.    But  it  is  equally  true, 

i  that  by  special  legislation  amounting  to  a  con- 
;  tract,  a  subsequent  Legislature  rnav  be  bound 

j  It  is  bound  irrevocably  by  a  legislative  grant' 
forever  parting  with  the  real  or  personal  pro- 
perty of  the  State,  which  is  held  to  be  a  con- 

:  tract  not  to  be  impaired  by  legislation  •  by  a 
temporary  or  perpetual  exemption  of  specific 
!  property  or  interests  from  taxation:  by  a  bond 
or  certificate  of  debt  issued  bv  the  State  for 

ii  money  loaned,  or  other  good  "and  sufficient 
consideration;  by  charters  of  incorporation 
unless  the  right  to  modify  or  repeal  them  is 

||  reserved  by  law,  and  by  all  legitimate  Wis- 


40 


lative  contracts.  The  exercise  of  such  power 
in  special  cases,  although  necessarily  control- 
ling, to  a  certain  extent,  subsequent  Legisla- 
tures, has  been  always  held  to  be  salutary, 
and  one  of  the  "essential  elements  of  sov- 
ereignty." 

The  power  exercised  in  the  cases  referred  to, 
or  in  most  of  them,  goes  far  beyond  that  exer- 
cised in  this  case;  for  here,  no  rightful  power  is 
surrendered,  but  simply  a  provision  made  for  a 
debt.  The  annually  accruing  interest  on  the 
debt  of  a  State  is,  in  all  well  regulated 
governments,  deemed  an  essential  part  of  the 
annual  expenses  of  government,  and  is 
always  annually  provided  for. 

THE  FAMILIAR  LAW  OF  SET-OFF. 

To  add,  as  an  additional  sanction  to  this 
high  obligation  already  existing,  for  the 
purpose  of  securing  its  prompt  and  punctual 
performance,  that  coupons  for  interest  shall 
be  received  as  money  in  payment  of  debts 
due  to  the  State,  would  seem  ordinarily  to  be 
not  only  a  very  innocent,  but  a  just  and 
convenient  measure;  for  it  would  prevent  a 
double  process  of  collection  and  payment,  by 
applying  to  the  State  the  familiar  law  of 
set-off,  which  is  good  between  individuals; 
and,  even  as  the  general  law  now  stands,  is 
good  against  the  State  in  any  case  in  which 
she  may  happen  to  be  a  plaintiff  against  a 
person  holding  a  debt  of  hers,  past  due. 
The  set-off  could  be  pleaded  against  her,  and 
the  courts  would  be  bound  to  allow  it.  The 
rule,  as  we  have  said,  is  one  of  justice  and 
convenience,  and  there  is  no  good  reason 
why,  in  cases  like  those  under  consideration, 
is  should  not  with  her  consent,  through  her 
Legislature,  be  applied  to  the  State.  That 
consent  has  been  given  in  these  cases,  and  in 
giving  it,  the  Legislature  certainly  did  not 
act  withont  precedent. 

EXEMPTION  FROM  TAXATION  A  LARGER  EXER- 
CISE OF  POWER. 

Soy  do  we  think  it  a  larger  exercise  of 
power  than  the  surrender  forever  of  the  right 
of  the  State  to  tax  the  property  and  income 
of  great  and  wealthy  corporations.  On  the 
contrary,  we  think  the  latter  immeasurably 
greater  than  the  former. 

That  such  powers  may  be  legitimately  exer- 
cised has  been  over  and  over  again  decided 
by  the  courts  of  the  States,  and  of  the  United 
States;  and  in  the  face  of  the  very  argument 
now  urged,  over  and  over  repeated,  and  as 
often  overruled. 

In  one  of  the  latest  cases  on  the  subject, 
Home  of  the  Friendless  vs.  Bouse,  8  Wall,  U. 
S.  R.  430,  the  Court,  at  p.  438,  says:  "The 
validity  of  this  contract  is  questioned  at  the 
bar,  on  the  ground  that  the  Legislature  had 
no  power  to  grant  away  the  power  of  taxa- 
tion. The  answer  to  this  position  is,  that  the 
question  is  no  longer  open  for  argument  here; 
for  it  is  settled  by  the  repeated  adjudications 
of  this  court,  that  a  State  inay,  by  a  contract 
based  on  a  consideration,  exempt  the  property 
of  an  individual  or  corporation  either  for  a 


specific  period  or  permanently.  And  it  is 
equally  well  settled  that  the  exemption  is 
presumed  to  be  on  sufficient  consideration, 
and  binds  the  State,  if  the  charter  containing 
it  is  accepted,"  citing,  in  a  note,  numerous 
cases  which  we  need  not  repeat. 

THE  FUNDING  ACT  AN  APPROPRIATION. 

As  to  the  objection,  that  the  funding  act 
violates  that  portion  of  the  tenth  section  of 
the  tenth  article  of  the  constitution  which 
provides  that  "no  money  shall  be  paid  out  of 
the  State  treasury,  except  in  pursuance  of  ap- 
propriations made  by  law,"  we  need  only  say, 
that  it  has  no  application  to  the  cases  before 
us.  By  the  equitable  principle  of  set-off  al- 
lowed by  the  funding  act,  the  taxes  are  paid 
or  extinguished  by  the  coupons  without  ever 
going  into  the  State  treasury,  and  conse- 
quently no  money  is  actually  paid  out  of  the 
treasury.  If,  however,  by  legal  intendment 
it  should  be  regarded  as  such  payment,  then,, 
by  like  intendment,  the  funding  act  would  be 
regarded  as  an  act  of  appropriation.  But  we 
think  there  is  no  payment  of  money  out  of  the 
treasury  in  the  case;  the  taxes  being  inter- 
cepted by  set-off. 

A  VALID  CONTRACT. 

Upon  the  whole,  the  court  is  of  opinion, 
that  the  undertakiog  on  the  part  of  the  State 
in  the  funding  act,  as  set  forth  on  the  face  of 
the  coupons  issued  thereunder,  constitutes  a 
valid  legislative  contract  on  good  and  suffi- 
cient consideration,  that  the  said  coupons 
should  be  received  in  payment  of  all  taxes, 
debts  and  demands  of  the  State;  and  that  the 
obligation  of  such  contract  cannot  under  the 
State  and  Federal  constitutions  be  impaired 
by  subsequent  legislation. 

That  provision  of  the  State  and  Federal 
constitutions  which  forbids  the  State  to  im- 
pair by  legislation  the  obligation  of  contracts, 
has  received  mature  consideration  by  this 
court  in  the  recent  cases  of  Taylor  vs.  Stearns, 
18  Gratt.  244;  and  in  the  Homestead  Cases, 
to  be  reported  in  22  Gratt.  266.  In  deliver- 
ing the  unanimous  opinion  of  the  Court  in  the 
last  mentioned  cases,  Judge  Christian  says: 
"The  inviolability  of  contracts,  public  and  £>ri- 
vate,  is  the  foundation  of  all  social  progress, 
and  the  corner-stone  of  all  the  forms  of  civi- 
lized society,  wherever  an  enlightened  juris- 
prudence prevails:"  and  we  do  not  think  he 
has  attached  an  undue  importance  to  this 
great  principle.    It  must  be  preserved. 

THE  REPEALING  ACT  VOID. 

The  act  of  March  7,  1872,  forbids  the  col- 
lecting officers  of  the  State  to  receive,  in  pay- 
ment of  "taxes  and  other  demands  of  the 
State,  anything  else  than  gold  or  silver  coin, 
United  States  treasury  notes,  or  notes  of  the 
national  banks  of  the  United  States,"  and  re- 
peals "all  acts  or  parts  of  acts  inconsistent 
with  that  act,"  thus  repealing,  or  attempting 
to  repeal,  that  portion  of  the  funding  act 
which  makes  the  matured  coupons  receivable 
in  payment  of  all  taxes  and  public  dues.  In 
the  language  of  Chief  Justice  Marshall,  in  the 


41 


case  of  State  of  New  Jersey  vs.  Wilson,  "this 
contract  is  certainly  impaired  by  a  law  which 
would  annul  this  essential  part,  of  it." 

We  are  of  opinion,  therefore,  that  the  act 
aforesaid  of  March  7,  1872,  is  repugnant  to 
the  constitutions  of  this  State  and  of  the 
United  States,  inasmuch  as  it  impairs  the  ob- 
ligation of  the  contract  of  the  State  with  the 
holders  of  coupons  issued  under  the  funding 
act,  as  above  set  forth,  and  is  on  that  account 
and  to  that  extent  void. 

THE  SEED-TIME  OF  FAITH  AND  HO>'OR 

The  court  is  sensible  that  a  grave,  respon- 
sible and  painful  duty  will  be  cast  on  the 
General  Assembly  by  "this  decision,  in  the 
present  impoverished  condition  of  our  people, 
but  we  feel  assured  that  it  will  be  faithfully 
and  wisely  met. 


We  think  with  the  entire  court  in  the  Home- 
stead cases,  that  temporary  relief  from  pecu- 
niary pressure  is  too  dearly  bought,  at  the 
price  of  the  violated  faith  of  ^  irginia.  She 
has  just  emerged  from  a  terrible  trial — an 
ordeal  of  fire — without  a  stain  on  her  escutch- 
eon. Impoverished,  crushed  and  dismem- 
bered, but  not  dishonored,  she  is  now  taking 
a  new  departure,  and  we  would  hope  to  see  it 
in  the  right  direction.  In  the  language  of  a 
vigorous  writer,  "Xow  is  the  seed-time  of 
faith  and  honor.  The  least  fracture  now  will 
be  like  a  name  engraved  with  the  point  of  a 
pin  on  the  tender  rind  of  a  young  beech,  the 
wound  will  enlarge  with  the  tree,  and  poster- 
■;  ity  will  read  it  in  full  grown  characters. !; 

This  court  is  unwilling  to  inflet  that  wound. 


CAN  SOUTH  CAROLINA  AFFORD  TO  REPUDIATE  ANY  OF-  HER  PRESENT 

DEBT! 


[From  The  News  and  Courier,  January  14,  1878.] 


We  have  shown  the  relative  advantages 
and  disadvantages  of  different  modes  of 
adjusting,  or  readjusting,  the  public  debt. 
We  have  shown  the  extent  to  which  the 
settlement  of  the  debt,  under  the  Consoli- 
dation Act,  was  agreed  to  by  the  people. 
We  shall  now,  in  conclusion,  inquire 
whether  the  people  of  South  Carolina  can 
afford  to  attach  to  themselves  the  stain  of 
compulsory  readjustment,  or  repudiation, 
even  if,  in  morals,  it-be  defensible  and,  in 
law,  it  can  be  maintained. 

South  Carolina,  until  her  funded  debt 
was  multiplied  by  the  Republican  admin- 
istrations, stood  high  in  credit  as  a  bor- 
rower. Before  the  war  South  Carolina 
could  obtain  money  in  Europe,  or  at  the 
North,  as  cheaply  as  it  could  be  ob- 
tained by  any  other  State  in  the  Union. 
The  notes  of  her  leading  banks  passed 
current  everywhere.  Upon  the  name  of 
South  Carolina  there  was  no  blot  or 
shadow.  The  utterances  of  her  public 
men  were  pitched  in  the  highest  key, 
and  the  reputation  of  the  citizens,  the 
planters  and  merchants,  for  financial 
integrity,  was  as  spotless  as  that  of  the 
State.  South  Carolina  called  for  little  for- 
eign capital  in  those  bright  days.  Mil- 
lions that  she  did  not  need  were  laid  at 
her  feet.  The  ghost  of  this  reputation 
remained  as  late  as  1871.  It  is  a  well- 
known  fact  that  the  bonds  issued  when 
Scott  was  Governor  found  a  ready  mar- 
ket, selling  for  a  time  at  80,  because  of 
the  confidence  reposed  in  the  faith  and 
honor  of  South  Carolina.  Persons  in 
the  North  did  not  pause  to  inquire 
whether  the  South  Carolina  of  1871  was 


the  South  Carolina  of  1861 ;  or  whether  the 
Legislature  and  State  officers,  by  whom 
the  bonds  were  issued,  were  truly  the  rep- 
resentatives of  the  taxpayers  of  the  State. 
They  knew  the  name  and  fame  of  South 
Carolina,  and  still  had  confidence  and  trust, 
the  trust  and  confidence  they  possessed  in 
the  olden  time.  The  State,  in  her  need,  may 
hold  these  persons  responsible  for  their 
errors  of  judgment.  The  people  of  South 
Carolina  cannot,  will  not,  deride  them  or 
sneer  at  them,  for  clinging,  to  their  cost, 
to  their  faith  in  South  Carolina.  And 
when  the  bubble  burst,  and  the  debt  stood 
revealed  as  Pelion  on  Ossa,  and  six  mil- 
lion dollars  of  obligations  were  sloughed 
off  by  the  Republicans,  under  the  Consoli- 
dation Act,  the  olden  confidence  in  South 
Carolina  was,  in  a  measure,  renewed.  It 
was  assumed  that  there  was  no  doubt  of 
the  genuine  character  of  the  Consolida- 
tion bonds.  The  Democratic  members  of 
the  Senate  and  House  of  Representatives 
voted  for  the  Consolidation  Act,  and  the 
people,  year  after  year,  acquiesced  in  it 
and  ratified  it.  They  who  had  bonds  and 
stocks  which  were  fundable  under  the 
Act,  hastened,  for  the  most  part,  to  fund 
them.  Others,  who  had  had  no  confidence 
in  the  former  issues,  did  not  hesitate  to  pur- 
chase bonds  issued  in  1875  and  1876.  The 
feeling  of  trust  was  strengthened  by  the 
course  of  the  Hampton  canvass.  It  was 
regarded  everywhere,  as  an  uprising  of 
popular  honesty  against  organized  fraud. 
The  Democratic  party  was  pledged  to 
abide  by  the  settlement  under  the  Con- 
solidation Act.  Governor  Hampton  was 
known  to  regard  it  as  the"  best  settlement 


43 


that,  under  the  circumstances,  could  be 
made.    It  was  a  rude  shock  to  the  popu- 
lar mind  when  it  was  first  hinted  that  an 
effort  would  be  made  to  readjust  the  debt, 
and  to  repudiate  a  part  of  it.    And  it  will 
be  a  heavy  blow  to  those  who  revere 
South  Carolina,  who  love  her  name,  if  the 
projects  of  a  few  rash  and  heedless  politi- 
cians shall  find  favor  in  the  General  Assem- 
bly.  Oh !  for  an  hour  of  John  C.  Calhoun,  j 
when  the  public  debt  of  South  Carolina  j 
shall  be  the  subject  of  discussion  within  I 
the  marble  walls  which  have  never  yet  I 
been  sullied  by  foul  repudiation  at  the  i 
hands  of  Carolinians  ! 

But  we  are  not  dealing  with  considera- 
tions of  sentiment,  or  what  may  be  ridi- 
culed as  Quixotic  notions  of  public  honor 
and  private  faith.  The  ill  effects  of  repu- 
diation will  be  direct  and  practical  ! 

"We  presume  that  it  is  known  to  the 
General  Assembly  that  there  is  not  money 
enough  in  South  Carolina,  in  possession 
of  her  citizens,  to  feed  and  clothe  the 
people  and  furnish  them  with  necessary 
supplies  from  thb  beginning  of  seed-time 
until  the  end  of  harvest,  It  is  a  fact.  The 
calculation  is,  that  the  available  capital  in 
South  Carolina,  belonging  to  South  Caro- 
lina, is  sufficient  to  put  the  seed  in  the 
ground.  From  that  time  until  the  crops 
are  garnered  the  State  is  dependent  on 
outside  capital.  Anybody  who  thinks 
for  a  moment  will  see  how  credit 
enters  into  the  transactions  of  every 
individual,  flowing  in  large  streams  from 
commercial  centres  like  Charleston,  and 
finding  its  way  in  trickling  rills  into  every 
nook  and  corner  of  the  State.  Where  are 
the  planters,  or  farmers,  or  business  men 
in  South  Carolina,  who  have,  in  bank  or 
in  securities  that  can  easily  be  converted 
into  money,  the  money  wherewith  to  pay 
for  all  the  labor  they  will  need,  and  the 
supplies  they  will  require,  from  this  time 
until  next  November  ?  The  members  of  J 
the  General  Assembly  may  profitably  ask  j 
themselves  the  question,  How  many  of  \ 


our  constituents  can  do  this  ?  And,  mark 
you,  every  single  person  who  cannot  sus- 
tain himself,  paying  as  he  goes  the  whole 
year  through,  is  more  or  less  dependent 
on  credit  !  The  cry  is  that  the  State  does 
not  need  credit,  and  is  better  without  it  ! 

Are  the  farmers  and  business  men  better 
without  it  ?  They  depend  on  credit.  The 
line  is  easily  traced.  The  shopkeeper  in 
the  country  who  gives  credit  to  the  farmer 
is  dependent  on  the  credit  he,  in  turn, 
obtains  from  the  wholesale  dealer;  and 
the  wholesale  dealer,  in  South  Carolina, 
is  dependent,  in  turn,  on  the  credit  he  en- 
joys in  the  North.  So  is  it  with  bankers 
and  factors,  to  a  large  extent.  They  can, 
by  reason  of  their  credit,  borrow  money  in 
the  North.  This  money  they  lend  out,  in 
the  form  of  discounts  and  advances,  in 
South  Carolina,  From  the  largest  bank 
down  to  the  humblest  shop  the  kej'stone 
of  the  commercial  fabric  is  credit.  It 
cannot  be  doubted  that  credit  in  South 
Carolina  will  be  impaired  by  any  repudi- 
ation measure.  The  members  of  the 
General  Assembly  represent  the  people. 
They  are  supposed  to  be  the  faithful  ex- 
ponents of  the  wishes  and  desires  of 
their  constituents,  the  people  at  large.  The 
whole  world  will  regard  public  repudiation 
as  only  one  step  removed  from  the  re- 
pudiation of  private  debts.  Indeed,  pub- 
lic credit  and  private  credit,  where  a 
government  is  representative,  are  abso- 
lutely inseparable.  Individual  credit 
was  not  seriously  injured  by  the 
excesses  of  the  Scott  and  Moses  Adminis- 
trations, because  they  were  not  regarded 
as  representatives  of  the  propert}^  and 
character  of  the  people.  Now  the  Gene- 
ral Assembly — the  Government — is  known 
to  be  truly  representative,  and  repudia- 
tion, by  the  Government,  will  deal  a  blow 
at  private  credit  from  which  the  State 
may  never  recover.  Even  if  South  Caro- 
lina capital,  the  money  belonging  here,  be 
lent  out  as  freely  as  before,  and  it  will  not, 
the  merchants  and  factors  will  find  it 


44 


more  and  more  difficult  to  obtain  the 
credit  which  they  now  receive.  Let  the 
members  of  the  General  Assembly  ponder 
this  one  single  question  :  What  would 
be  the  condition  of  South  Carolina  if,  for 
one  year,  the  people  could  buy  no  single 
thing  except  for  cash?  It  is  no  exaggera- 
tion to  say  that  half  the  land  now  tilled 
would  lie  idle,  and  half  the  laborers 
now  finding  employment  would  remain 
without  work !  To  this  appalling  condition 
will  South  Carolina  draw  nigh,  if  credit 
be  destroyed.    This,  however,  is  not  all. 

It  will  not  be  denied,  we  presume,  that 
South  Carolina  needs  white  labor  and  for- 
eign capital.  With  her  present  population 
the  increase  of  wealth  will  necessarily  be 
slow.  There  is  so  small  a  margin  between 
expenses  and  income,  that  barely  any  ad- 
dition is  made  to  the  aggregate  capital, 
year  by  year.  We  doubt  that  the  State 
to-day  is  as  well  off,  in  point  of  money,  as 
she  was  two  years  or  four  years  ago.  Mis- 
government  is  not  alone  responsible  for 
our  troubles.  Honest  government  alone 
will  not  place  the  State  on  the  high-road 
to  prosperity.  What  a  blessing  would  be 
the  advent  of  ten  thousand  sturdy  immi- 
grants, not  paupers  but  persons  possessing 
some  means  !  Such  immigrants  as  these, 
whether  from  Old  England  or  New  Eng- 
land, will  not  come  to  live  in  a  State 
which  has  branded  itself  as  dishonest  ! 
They  will  not  expect  the  people  to  be  more 
honorable,  as  individuals,  than  they  prove 
themselves  to  be  as  an  organized  commu- 
nity. South  Carolina  must  bid  a  long- 
farewell  to  immigration  of  the  class  de- 
sired and  required,  if  the  General  Assem- 
bly be  bent,  at  any  cost,  on  repudiation. 
This  is  not  all  ! 

South  Carolina  needs  capital  for  manu  < 
facturing  purposes.  No  State  in  the 
Union  has  better  natural  facilities.  The 
labor  is  here,  the  cotton  is  here,  the  mine- 
rals are  here,  the  fertile  soil,  capable  of  pro- 
ducing almost  every  known  tree  or  plant, 
is  here  at  our  doors.   Only  one  thing  is 


needed  to  bring  these  elements  of  wealth 
into  active  use,  and  build  up  in  South  Caro- 
lina chains  of  villages  like  those  which 
mark  the  thrift  and  advancement  of  New 
England.  Here  and  there  a  mill  is  put  up, 
and  every  one  of  them  pays  well.  But  we 
creep,  instead  of  walking  or  running,  so 
long  as  we  depend  on  our  own  capital. 
Can  South  Carolina,  alone  and  unaided, 
turn  to  full  account  the  magnificent 
water  power  at  Columbia  alone  ?  Capi- 
tal from  abroad  we  can  get ;  it  was  coming. 
The  hydra  of  Repudiation,  guarding  the 
portals  of  South  Carolina,  will  frighten 
away  every  cent  of  capital  that  was  gravi- 
tating in  this  direction  in  search  of  safe 
and  remunerative  employment ! 

There  is  other  trouble  brewing.  The 
old  political  issues  are  dead.  There  is 
little  life  in  the  effort  to  represent  the 
South  as  craving  a  new  rebellion.  It 
happens,  however,  that  as  dangerous  an 
issue  as  any  of  the  old  ones  is  rapidly 
growing  in  importance.  During  the 
Hayes-Tilden  canvass,  the  cry  was  raised 
that  the  aim  of  the  South  was  to  reim- 
burse the  Southern  States,  for  their  losses 
during  the  war,  by  securing  enormous 
subsidies,  and  by  enforcing  payment  for 
damage  done  by  the  Federal  armies.  It 
had  little  effect,  at  that  time ;  but  the  South 
is  now  seen  ranged  alongside  of  the  West, 
opposing  the  resumption  of  specie 
payment,  and  seeking  to  pay,  in  debased 
silver,  debts  contracted  for  payment  in 
gold  or  its  equivalent,  while  State  after 
State  in  the  South  seeks,  on  one  pretext  or 
another,  to  relieve  itself  of  its  debt  and 
repudiate  its  obligations.  The  fear  is 
growing  that  the  Democratic  party  has 
discarded  the  lofty  sentiments  of  by-gone 
days,  and  may  become  as  reckless,  where 
property  and  money  are  concerned,  as 
the  Republican  party  has  been  where  the 
object  was  to  retain  and  increase  political 
power.  Repudiation  in  South  Carolina 
will  place  another  feather  on  the  back  of 
the  Democratic  party.    The  strength  of 


45 


the  Democratic  party  is  in  the  South,  and 
what  the  South  is  the  National  Democracy 
must  be,  if  the  party  is  to  he  successful. 
Successful,  however,  no  party  can  long 
be.,  in  a  State  or  in  the  Union,  when  that 
party  is  committed  to  repudiation  of  any 
sort  or  degree.  It  is  a  menace  to  property, 
and  the  party  which  is  opposed  by  property 
cannot  long  hold  dominion,  even  in  a  land 
where  universal  suffrage  prevails.  The 
scales  can  easily  be  turned.  Once  let  it  be 
known  that  Democratic  ascendency  im- 
perils property,  and  the  Republican  party 
will  rapidly  regain  its  lost  vantage  ground 
in  the  country.  They  who  would  loathe  the 
Republican  party,  under  all  other  circum- 
stances, would  be  tempted  to  cling  to  it, 
as  the  only  means  of  saving  themselves 
from  loss  or  depreciation  of  property. 

It  will  be  said,  of  course,  that  South 
Carolina  does  not  intend  to  repudiate  her 
debt;  that  readjustment  is  not  repudia- 
tion: that  the  rejection  of  fraudulent  debts 
is  not  repudiation ;  that  the  rejection  of 
bonds  issued  by  Republicans  is  not  re- 
pudiation, &c.,  &c,  &c.    This  euphem- 


ism will  serve  in  South  Carolina;  but  it 
j  will  not  serve  beyond  the  State  line ;  and  by 
j  |  the  estimation  in  which  our  acts  are  held 
beyond  the  State,  not  by  the  name  given 
them  in  the  State,  will  our  gain  or 
loss  be  measured.  We  may  protest  and 
explain  as  much  as  we  please,  but  the  re- 
opening of  the  Consolidation  Act  and,  the  re- 
j  jection  of  any  of  the  bonds  issued  under  the 
ActicHlbe  regarded,  as  repudiation.  South 
Carolina  cannot  separate  herself  from  her 
1 1  sister  States.  Fiscal  secession  is  as  im- 
practicable as  physical  secession.  The 
most  that  can  be  saved  to  South  Carolina, 
by  the  most  violent  of  the  schemes  yet 
proposed,  is  a  million  dollars,  sixty  tliou- 
)  sand  dollars  a  year.  For  this  pittance 
South  Carolina  is  asked  to  make  herself  a 
thing  apart — a  Pariah  among  the  States — 
to  smirch  her  good  name,  to  destroy  the 
credit  of  all  her  citizens,  to  place  herself 
in  a  position  where  she  must  struggle 
along  without  the  help  ever  ready  to  be 
given  her.  and  that  will  be  given  if  her 
sons  are  true  to  her  and  themselves,  to 
her  present  necessities  and  the  glories  of 
an  untarnished  past. 


A  SUMMARY  OF  FACTS  AND  CONCLUSIONS. 


[From  The  News  and  Courier,  January  15,  1878.] 


We  have  endeavored,  in  preceding  arti- 
cles, to  give  a  clear  exposition  of  the  ori- 
gin, growth  and  character  of  the  public 
debt  of  South  Carolina,  and  to  point  out 
the  manner  in  which  the  people  have 
bound  themselves,  or  are  bound,  to  abide 
by  the  settlement  of  the  debt  effected  four 
years  ago.  The  articles  have  necessarily 
been  long,  and,  in  order  to  a  better  under- 
standing of  the  subject,  we  shall  now  give 
a  brief  statement  of  the  conclusions  to 
which  we  have  come. 

1.  The  Old  debt  of  the  State,  already 
incurred  when  the  Republicans,  under 
the  Reconstruction  Constitution,  came 
into  oflice,  was  $7,262,231.  This  included, 
bonds  and  stocks  $5,407,306,  interest  to 
October  31,  1868,  $434,791,  Bills  Receiva- 
ble $160,000,  and  bills  of  the  Bank  of  the 
State  $1,260,134.  For  this  Old  debt  the 
people  were  indubitably  responsible,  and 
its  validity  cannot  be  questioned.  The 
public  debt  on  October  31,  1873,  was 
$15,851,627.  On  December  22,  1873,  the 
Consolidation  Act  went  into  operation, 
and  on  October  31,  1876,  the  debt  was 
$7,114,250. 

2.  The  Consolidation  Act  authorizes  the 
funding,  at  fifty  cents  on  the  dollar,  of 
bonds  and  stocks  to  the  amount  of 
$9,886,627.  The  interest  on  these  obliga- 
tions to  January  1,  1874,  is  fundable  at 
the  same  rate.  Of  the  debt  existing  on 
October  31,  1873,  Conversion  bonds  to  the 
amount  of  $5,965,000  were  repudiated  by 
the  Consolidation  Act.  They  were  "put 
'  'upon  the  market  without  any  authority 
"of  law,"  and  were  "declared  to  be  abso- 
lutely null  and  void."  These  Conversion 
bonds  so  repudiated  comprise  the  whole 
amount  of  such  bonds  placed  at  any  time, 


and  in  any  way,  in  the  hands  of  the  Finan- 
cial Agent,  H.  H.  Kimpton. 

3.  The  debt  outstanding  on  March  31, 
1877,  was  $7,100,841,  consisting  of 
$4,398,290  of  Consolidation  bonds  and 
stock,'  and  $2,704,551  of  other  bonds  and 
stocks  fundable,  and  not  yet  funded, 
under  the  Consolidation  Act. 

4.  The  unconsolidated  debt  ($2,704,551) 
remains  to  be  funded  at  50  cents  on  the 
dollar,  together  with  $500,000  of  interest 
to  January  1, 1874,  upon  that  debt.  When 
the  funding  or  consolidation  shall  be  com- 
pleted the  whole  debt  will  be  $5,998,565. 
This  is  $1,263,666  less  than  the  Old  debt 
in  1868,  and  $9,853,062  less  than  the  total 
debt  on  October  31,  1873. 

5.  One  proposed  mode  of  readjustment 
contemplates  the  payment  of  the  "honest 
"debt,"  dollar  for  dollar,  and  the  repudia- 
tion of  the  "fraudulent  debt,"  dollar  for 
dollar.  The  "honest  debt,"  otherwise  the 
Old  or  Ante-Reconstruction  debt,  has  been 
shown  to  be  $7,262,231.  About  four  mil- 
lion dollars  of  this  amount  have  been  con- 
solidated, and  have  borne  interest  on  only 
one-half  the  original  amount.  Interest, 
therefore,  must  be  allowed  on  two  million 
dollars,  at  6  per  cent.,  amounting  to 
$720,000;  and  interest  must  be  allowed  on 
the  unfunded  Old  debt  of  $1,828,001,  for 
the  same  period,  amounting  to  $658,000. 
Therefore  the  total  debt  under  the  "dol- 
"lar  for  dollar"  plan  of  adjustment  will 
be  $8,640,231.  This  involves  the  utter  re- 
pudiation of  the  bonds  issued  for  the  Relief 
of  the  Treasury,  for  Interest  on  the  Public 
Debt,  and  for  the  Land  Commission,  and, 
nevertheless,  makes  the  whole  debt 
$2,641,566  more  than  the  whole  debt  will 
be  under  the  Consolidation  Act. 


47 


6.  A  second  mode  of  adjustment  is  to 
recognize  the  Old  debt  as  before,  and  to 
recognize  the  Republican  or  Post-Recon- 
struction bonds  to  the  extent  of  the  money 
actually  received  for  them,  by  or  for  ac- 
count of  the  State.  The  amount  of  money 
so  received  is,  at  least,  $3,838,716.  This, 
added  to  the  Old  funded  debt  of  $5,407,- 
306  (exclusive  of  the  unfunded  Bills  Re- 
ceivable and  bills  of  the  Bank  of  the 
State)  makes  the  entire  debt,  without 
counting  any  interest  on  the  Old  funded 
debt,  $9,246,022.  The  debt,  by  this  mode, 
will  be  $3,247,357  more  than  under  the 
[Consolidation  Act. 

7.  A  third  mode  of  adjustment  is  to  rec- 
jognize  the  Consolidation  bonds  and  stocks 
| representing  the  Old  debt,  reject  all  other 
!  Post-Reconstruction  bonds  and  stocks,  and 

:  complete  the  funding  of  the  Old  debt 
under  the  Consolidation  Act.  The  Old 
debt  ($5,407,306)  with  interest  to  October 
31,  1868,  ($434,791)  and  interest  from  July 
1,  1871,  when  the  payment  of  interest 
ceased,  to  January  1, 1874,  not  from  Octo- 
ber 31,  1869,  as  erroneously  stated  in  the 
article  published  on  January  7,  ($811,195) 
amounts  to  $6,653,192.  Funding  this  at 
50  percent.,  and  adding  $160,000  for  Bills 
Receivable,  and  $1,260,134  for  Bank  of  the 
State  bills  and  interest,  the  debt  is  $4,746,- 
730.  This  is  more  than  a  million  dollars 
less  than  the  debt  under  the  Consolidation 
Act;  but  at  what  cost  ?  One  half  of  the 
Old  debt,  for  which  the  State  received 
dollar  for  dollar  in  gold,  is  repudiated 
utterly,  and  no  provision  is  made  for  any 
of  the  New  debt. 

8.  Another  mode  of  readjustment  is  to 
recognize  the  unfunded  Old  bonds,  at  their 
face  value,  and  to  let  the  funded  Old  bonds 
stand  under  the  Consolidation  Act.  This 
bastard  arrangement  will  make  the  debt 
about  $3,000,000.  It  involves  the  repudi- 
ation of  one-half  of  the  principal  and  in- 
terest of  the  Old  bonds,  held  by  those  who 
were  willing  to  compromise  with  the  State, 
in  1874  and  since,  while  to  the  inexorable 


creditors  who  sullenly  held  aloof,  trusting 
to  the  chapter  of  accidents,  it  makes  pay- 
ment to  the  last  farthing. 

9.  It  follows  that,  as  a  matter  of  money, 
the  settlement  of  the  debt  under  the  Con- 
solidation Act  is  far  cheaper  than  any 
other  proposed  settlement  of  a  non-repu- 
diating character.  Moreover,  it  would  be 
impracticable,  in  any  plan  of  readjust- 
ment, to  give  the  advantage  of  any  better 
terms  than  those  of  the  Consolidation  Act 
to  the  persons,  if  any,  entitled  to  that  ad- 
vantage. At  least  one-half  of  the  Consol- 
idation bonds  and  stock,  it  is  believed, 
cannot  be  traced  back  to  their  original 
source.  The  State  must  give  the  holders 
the  benefit  of  the  doubt,  and  either  prove 
the  bonds  to  be  bad  or  accept  them  as 
good.  There  is  almost  insuperable  difficul- 
ty in  the  way  of  picking  and  choosing 
among  the  Consolidation  bonds,  and  if  it 
takes  the  State  several  months  to  deter- 
mine whether  particular  bonds  are  bad, 
how  could  a  purchaser  be  expected  to 
know  their  doubtful  character  ? 

10.  The  Taxpayers'  Convention  of  1871 
found  that  the  public  debt  then  was 
$9,865,908,  and  declared,  by  formal  reso- 
lution, that  this  was  "a  valid  debt,"  and 
that  "the  honor  and  funds  of  the  State 
"are  lawfully  pledged  for  the  redemption 
"thereof."  While  recognizing  this  debt, 
the  Convention  gave  full  notice  and  am- 
ple warning  to  the  public  that  any  bonds 
or  obligations  issued  thereafter  would  be 
held  to  be  "null  and  void."  The  public 
debt  as  recognized  by  the  Consolidation 
Act  was  $9,886,627,  being  only  $20,719 

!  more  than  the  debt  recognized  by  the 
Convention.  And  in  kind,  as  well  as  in 
amount,  the  debt  recognized  by  the  Con- 
vention is  virtually  the  same  as  the  debt 
recognized  by  the  Act.  The  repudiation 
of  the  Conversion  bonds,  amounting  to 
$5,965,000,  brought  the  Consolidation 
Act,  in  respect  of  the  amount  of  debt,  into 
harmony  with  the  declarations  of  the  Con- 
vention.    And  the  $9,865,906,  without 


interest  to  January  1,  1874,  so  recognized 
in  1871,  is  reduced  to  $5,998,665  by  the 
funding  under  the  Act. 

11.  The  different  investigations  made 
since  1871  show  that  the  whole 
amount  of  State  bonds  alleged  to  be 
in  any  way  fraudulent  (now  that  the 
Conversion  bonds  are  disposed  of)  is 
$2,200,000.  This,  without  interest, 
is  equal  to  $1,100,000  of  Conversion 
bonds.  The  objections  to  the  impugned 
bonds  are,  in  many  respects,  frivolous, 
and  every  one  of  the  objections  has  been 
cured  by  Act  of  Assembly,  under  the  de- 
cision of  the  Supreme  Court,  or  by  the 
action  of  the  people. 

12.  The  settlement  under  the  Consoli- 
dation Act  was  acquiesced  in  by  the 
whole  people  in  the  campaign  of  1874, 
when  both  the  Republicans  and  the  Inde- 
pendents (whose  candidates  for  State 
officers  were  supported  by  the  Democracy) 
were  especially  pledged  "to  maintain  the 
"settlement  of  the  public  debt  as  made 
"last  winter."  In  1876  the  State  Demo- 
cratic Committee,  by  formal  resolution, 
declared  that  "the  State  debt  having  been 
"practically  adjusted  by  the  Consolida- 
tion Act  of  December  22,  1873,  and 
"most  of  the  creditors  having  come 
"in,  under  that  Act,  we  consider 
"the  adjustment  final,  and  pledge  the 
"party  to  abide  by  it."  And  on  Decem- 
ber 20,  1876,  the  House  of  Representa- 
tives, composed  almost  exclusively  of 
Democrats,  resolved  that  "we  hereby  do 
"reiterate  in  good  faith  our  pledge  to  re- 
"deem,  at  the  earliest  practical  moment, 
"the  credit  of  the  State,  by  the  payment 
"of  the  matured  interest  on  the  valid, 
"legal  and  recognized  bonded  indebted- 
"ness  of  the  State,  as  now  provided  by 
"law."  The  members  of  the  House  of 
Representatives  on  December  20,  1876, 
constitute  a  majority  of  the  present 
House  of  Representatives.  From  the 
Taxpayers'  Convention  as  to  amount,  and 
from  December  22,  1873,  as  to  character, 


the  public  debt,  as  fundable  under  the 
Consolidation  Act,  has  been  repeatedly 
ratified,  and  the  settlement,  under  the 
Consolidation  Act,  has  likewise  been 
solemnly  accepted,  as  final,  by  the  Demo- 
cratic party  and  the  people. 

13.  The  bonds  and  stocks  fundable, 
and  not  yet  funded  under  the  Consolida 
tion  Act,  amounting  to  $2,704,551,  are 
entitled  to  be  so  funded  on  demand.  The 
Consolidation  Act  was  in  the  nature  of  a 
compromise  with  the  public  creditors, 
and  the  State  cannot,  with  good  grace, 
hold  the  consenting  creditors,  who  have 
funded,  to  the  terms  of  the  compromise, 
if  it  deny  the  creditors  who  have  not  yet 
come  in  the  right  to  fund  their  securities 
in  like  manner. 

14.  The  coupons  of  the  Consolidation 
bonds  are  by  the  terms  of  the  Act,  and 
as  bearing  the  declaration  on  their  face, 
receivable  "in  payment  of  all  taxes  due 
"the  State  in  the  year  in  which  they 
"mature,  except  for  tax  levied  for  the 
"public  schools."  This  constitutes  a  con- 
tract within  the  meaning  of  the  Constitu- 
tion of  the  United  States ;  and  the  Supply 
Act  of  1877  is  repugnant  to  the  Constitu- 
tion and  void,  so  far  as,  in  directing  what 
shall  be  received  for  taxes,  it  excludes  the 
coupons  of  the  Consolidation  bonds.  The 
holders  of  such  coupons  can  enforce  their 
rights  in  the  Courts. 

15.  Any  reopening  of  the  Consolidation 
Act,  and  the  rejection  of  any  of  the 
bonds  or  stock  issued  under  the  Act,  will 
be  treated  as  repudiation  outside  of  South 
Carolina,  whatever  polite  name  be  given  to 
the  process  within  the  State.  Such  repu- 
diation will  be  a  blot  upon  the  public 
honor,  and  injurious,  if  not  destructive, 
to  private  credit.  The  injury  to  private 
credit  will  be  felt  by  every  citizen  who  is 
not  able  to  pay  cash  for  every  thing  that 
he  needs,  in  business  and  for  use.  Repu- 
diation will,  also,  prevent  the  influx  of 
immigrants,  and  drive  away  the  capital 
now  ready  to  flow  into  the  State  for  em- -. 


ployment  in  manufactures,  or  otherwise. 
Moreover,  it  will  give  color  to  the  danger- 
ous idea  that  the  political  supremacy  of 
'  the  Democratic  party  will  make  property 
insecure,  and  will  encourage  the  general 
repudiation  of  public  and  private  obliga- 
tions. 

To  the  facts  and  deductions  thus  sum- 
marized we  have  little  to  add.    We  have 
demonstrated  that  the  settlement  under 
the  Consolidation  Act  is  the  cheapest  that 
can  be  effected,  short  of  a  species  of  re- 
pudiation which,  in  rejecting  some  of  the 
Old  debt  and  the  whole  of  the  Xew  debt, 
is  inconsistent  with  the  principles  of  its 
ardent  advocates.    We  have  shown  that 
the  Democratic  party,  the  State,  is  bound 
to  observe  that  settlement  as  final.  We 
have  made  it  manifest  that,  as  to  the  j 
Consolidation  bonds  and  stock,  the  State  j 
cannot  escape  from  her  obligations,  or  \ 
impair  her  contract,  whatever  the  action  j 
of  the  Legislature.    We  have  shown  that  ; 


the  amount  of  debt  tainted  with  fraud  is,  at 
an  extreme  estimate,  insignificant  in  com- 
parision  with  the  cost  of  the  injury  that  r  e 
pudiation  will  do  the  people  of  the  State. 
As  a  matter  of  money,  as  a  matter  of 
honor,  as  a  matter  of  law,  the  settlement 
under  the  Consolidation  Act  should  be 
again  ratified.  Xo  other  course  is  con- 
sistent with  what  the  Legislature  owe 
themselves,  the  people  and  the  Demo- 
cractic  party.  There  is  no  doubt  of  the 
ability  of  the  State  to  pay  regularly  the 
interest  on  the  debt  under  the  Consolida- 
tion Act.  It  is  a  small  debt  in  proportion 
to  the  debt  of  other  States.  And,  as  a 
matter  of  fact,  the  poverty  of  the  people 
is  only  an  additional  reason  why  the  debt 
should  be  recognized  and  paid.  Rich 
communities  may  sometimes,  with  safety, 
set  the  world  at  defiance.  Poorer  Com- 
monwealths cannot.  South  Carolina  is 
too  poor  to  afford  herself  the  luxury  of 
bad  faith  and  repudiation. 


975.7  0254  534262 


